Shozu makes inroads with pre-install model

Social networking sites are gaining traction in the mobile world, yet many still struggle with one very key element--making money. Most advocate advertising as their primary revenue stream. However, I think it's still unclear whether advertising is going to be a viable channel for all the application firms banking on it.

Shozu, however, has a slightly different take on the mobile social networking model. The company, which helps its members share photos and video content, makes its money by licensing its technology to handset makers and getting its app pre-installed on handsets. Shozu believes advertising will play a role in the revenue stream at some point, and they are conducting some trials in this area. In the meantime, however, the firm is pursuing its original model--licensing its technology. So far, Shozu has its application (which is free to end-users) pre-installed on the handsets of three of the top five handset makers--Sony Ericsson, Samsung and Motorola.

Shozu executives believe that getting their app pre-installed on as many handsets as possible is the key to building their community. They are well aware of the fact that many users won't go through the extra gyrations necessary to download an app. The company also works with wireless operators and splits its revenue with carriers by taking a percentage of the data traffic it generates. That split may seem minor, but the company has done some interesting things to help drive traffic. For example, the company gave High School Musical star Ashley Tisdale a handset equipped with its application. She posted behind-the-scenes videos and other personal content, which attracted more than 6.7 million YouTube views at an average of 225,000 views per clip.

Shozu executives know that if they want to make inroads in the United States, they have to develop some close alliances with operators. The company's app was available on all the handsets offered by former MVNO Amp'd--however Shozu's deal went down the tubes along with Amp'd (the MVNO filed for bankruptcy in July).

I know that the mobile social networking model is still being refined, but I'm betting that innovative players such as Shozu will persevere and find a business model that makes sense.  - Sue