AT&T’s prepaid card for selling content is a confusing idea. In an excellent interview on PaidContent.org, Mike Palumbo, sales director of AT&T pre-paid services, says, “We did not want to get in the “Visa space”…so we stumbled into online content.”

The business of prepaid calling cards has a certain logic: the variable cost of the product is very low, prepaid cards allow the selling to disguise the real cost of a call, the typical buyer is less likely to have a credit card or a relationship with a long distance company. But for these reasons, the prepaid calling card business is pretty grubby, perhaps a step up from the check-cashing business.

The prepaid business has some distinct competencies, such as charging for small transactions, managing millions of “accounts” with stored value, and retail distribution. But there are a lot of reasons why Web content is a poor match for them:

  • Too many middle men: Because they’re not selling their own content, they’re adding two middlemen (themselves and the retailers) with high margin expectations compared to those of credit card companies, the traditional single middlemen for content transactions.
  • Retail friction: So far, AT&T has two retailers for this business. For Shockwave.com, it’s a chain of convenience stores. For Vindigo, a chain of truckstops. How many cards do they have to sell to justify the space that they would normally devote to Slim Jims and Tic Tacs?
  • The big disconnect: So, you’re on Shockwave.com and you want one of these cards. Do you bike over to the Quik-E-Mart with a couple of twenties, or do you surf over on to another site? Same deal for the busy executives targeted by Vindigo. Meanwhile, prepaid calling cards are sold by establishments and vending machines that are just few steps from a pay phone.
  • The wrong target: This is a product, AT&T admits, that is aimed at people who either don’t have a credit card or don’t want to use one online. What’s the overlap between these people and the market for online content?

Both Vindigo and Shockwave.com’s Gameblast seem like good candidates for selling “content”. AT&T’s Prepaid Web Cents card doesn’t seem like a very good way to pay for it.