Crazy Fraud

Daniel Malmedahl tried to impress his fellow 17-year olds with a convincing impression of a moped. He was a bit surprised that they found it funny, but quickly came to enjoy making people laugh. At some point someone recorded the sound and emailed it to a friend, who sent it to 10 friends, who sent it to 100 friends etc.

Soon it arrived on the desktop of Erik Wernquist who was inspired to create The Annoying Thing (as you see it here, or click for the original short video).

Then Jamster bought the rights, everyone saw it, millions downloaded it and it became top of the UK music charts making Jamster multiple millions.

So if you have something people want, how do you turn it into income?

"Paris Hilton" is currently the most popular search on Google. If you have a set of nude pictures of Paris Hilton, or the address list from her mobile phone, or a video, then the formula is easy. Millions of surfers will pay to see this material so the Pay-per-View model will work. Of course there is the small problem of controlling access - you have to show that the pictures exist without giving it all away. The movie industry has perfected the art with the trailer, a short exerpt that showcases the content without spoiling the story. Like the trailer: buy a ticket to the movie. Like the pictures, pay to see the rest.

There are other approaches. ADVFN.com offers stock price tracking and even lets you create and track a personal portfolio. This basic service is free, but very useful if you want this information. Also, just by signing on you have declared your interest in financial investment. The free service allows you to test the service and build up trust. That way ADVFN would be your natural first choice when you want to trade stocks, exchange currencies, buy into hedge funds or any of a host of other financial services.

Perhaps the simplest model comes from PackingList.info. This site has only one piece of content: a generic packing list downloadable in pdf and MS Word. Although the site is clearly intended as a tutorial example, the author hopes that anyone who wants a packing list might also want to buy holiday reading or a travel guide. He has signed up as an Amazon affiliate, so if you click on the link and buy from Amazon they will pay a commission.

You might ask why he doesn't also add links to travel bookings, insurance, clothes and equipment. I think it's because it was never really intended to be a commercial proposition and it probably doesn't attract a lot of traffic. Nevertheless PackingList.info is instructive and worth a visit.

So that's three models so far:
a) Pay-per-view (porn or business reports),
b) Tiered membership (ADVFN) and
c) Affiliate (Packinglist.info).

But what of the Crazy frog?

Well you have probably seen the TV advertisements. Just text the number and you will be sent the ringtone - at least that's what most people seem to think. In fact by ringing that number you have signed a contract or "joined a club". Apparently it does say that on the ad but it goes so quickly and in such small print I couldn't see the details.

Once you've joined (£1.50) you are sent the ringtone. And another one, and another. And these new ringtones cost £2.50 and come in once a week. If you don't complain then they start to come in twice a week, and eventually daily. My son has a dormant account with no phone and no calls - but it still came to about £50 for a month.

Apparently the consumer watch dogs have been inundated with complaints. You can see how many people have been duped by the "free" service if you do a google search for "Jamster fraud" or "Jamster scam" and follow the discussion on blogs and bulletin boards.

Meanwhile Jamster continue to advertise, pulling in mainly children and then charging as much as they can get away with. So far they are said to have made over £10m on the Crazy Frog.

Good business or just plain fraud?