A Domaining Like Opportunity?: SMS Common Short Codes
Common Short Codes seems a lot like domain names, but they aren’t a good investment opportunity yet.
Have you ever seen an ad that read “Text keyword to 55112…”? Or voted on American Idol by sending a SMS text to a five digit number? If so, you’ve experienced “common short codes”. These are the 5 or 6 digit codes that you send text messages to for automated responses, voting by phone, etc.
Some firms used “vanity” short codes, such as Google using “GOOGL”. This is similar to a vanity toll free number.
On the surface it would seem like this presents a good domain-like opportunity for investment: Register a bunch of short codes that correspond to generic words on the phone and hold onto them for resale.
Unfortunately, it’s not such a great opportunity. At least yet.
First, short codes are region or country specific. U.S. short codes are not the same as those in Europe. In the U.S. there are regarding 1.1 million possible short codes using the current 5 and 6 digit combos.
Second, they are expensive. If you want to register a specific short code, your registration fees are a whopping $1,000 a month. It’s $500 a month if you let the registry select a code for you, but that kind of defeats the purpose.
Third, the registration agreement doesn’t give you a guaranteed right to renew. You could register a short code for $12,000 this year and then be told you can’t renew it as its value increases.
Those are three good reasons not to register common short codes. If you want to actually use your common short code the hurdles are even higher. You have to strike a deal with each major carrier in the country to activate your code. That means dealing with Verizon, AT&T, SprintPCS, et al to get them to approve your code for their network.
Imagine if you registered a domain name. It only worked in the U.S., and you had to strike a deal with all of the major ISPs counting AOL, Time Warner, AT&T, etc. to allow their clients to view your domain! There’s good reason for the networks to do this with text messages to maintain network quality, but it’s still a big hurdle. One short code expert I talked to stated it takes 2-3 months to get all of the approvals even if you know what you’re doing.
Following all of that, the registry could decide to not renew your code at the end of the year.
If you still aren’t convinced, consider that the value of vanity short codes may decrease. If you use a smart phone that has a keypad, you’ve probably noticed that the keypad doesn’t have the corresponding letters underneath each number. That makes it hard for people to send texts to “GOOGL” without knowing the corresponding numbers. If there’s any value in vanity short codes, I’d say it’s simple numbers like 12345.
Perhaps common short codes will be a better domain-like opportunity in the future if the market for registration becomes competitive. Until then, I’ll sit this one out.
