So what happens when you try to launch a new mobile phone service with edgy ads that say “Try not to die–Amp’d Mobile is coming”?
Yeah, you get a lot of edgy cool hip viral buzz–and a whole lot of deadbeat customers. From BusinessWeek:
The gold rush of specialized cell-phone companies targeting niche audiences took another hit on June 1 as Amp’d Mobile, an edgy upstart geared to free-spending youths, filed for Chapter 11 bankruptcy protection.
Apparently, those free-spending youths don’t care much for paying their cell-phone bills. A court motion filed on June 4 explains that Amp’d “experienced an unprecedented growth of subscribers” between November, 2006, and February after running ads on MTV (VIA) about the wireless phone company’s lineup of mobile music and video content.
Collecting payments from these subscribers proved to be a challenge, however. “Approximately 90% of the debtor’s customers were on 18-month service contracts,” according to the filing. “The debtor began to find a host of credit and collections problems (that) contributed ultimately to a liquidity crisis.” By May, the number of nonpaying customers reached 80,000. That’s nearly half of Amp’d’s current customer base of 175,000 subscribers.
Maybe it works better for Combos and Skittles to target youth, ’cause you don’t need a service contract to buy those.