Monstermob's share price halves on China regulation news

Saw a note in The Media Guardian about Monstermob’s share price taking a battering (down 80.5p to 56p).

I had a look at the statement about the issue on the Monstermob site.  Here’s a few quotes:

Monstermob believes
that the short term impact could be substantial, as circa 40 per cent of our
net revenues in China are currently subscription based (as opposed to single
purchase).

What a hit!  Forty percent??   The text goes on to explain that China accounts for about 50% of the group’s net revenue.   I wonder just what the mood was like in the board room when they were mullin this news.   So their net revenue is potentially cut by 20-25%?  Ooooh dear.

As a continuation of previous initiatives, China Mobile will also begin
to cancel existing WAP subscriptions that have not been active for more than
four months.

So basically the folk who didn’t know how to unsubscribe — or couldn’t be bothered to do so — are going to be automatically switched off and they potentially account for a whopping 40% of business.

No wonder the share price tanked.

With many of the mobile ringtone companies I’ve come across, the concept has been to get as many people hooked as possible then make it as difficult as legally possible to unsubscribe — in order to garner repeat, recurring revenues.  I just don’t agree with this as a business practice.  I don’t agree with making money out of people’s base confusion.   

I myself have a problem with any business that is nailed to the floor the moment you ask a customer if they’d like to continue.   Or if you switch off a customer’s service and then wait for them to repurchase it.   I much prefer to have clients who are delighted with the service and if, for some reason, such the China Mobile intervention,  service was terminated, I’d be safe in the knowledge that each client would go out of their way to re-subscribe immediately — and I’d only lose a very small proportion of business as a result.

I applaud the China Mobile/China Government strategy of introducing a degree of clarity to their industry.  It certainly forces a reassessment for all companies serving that marketplace.