It's interesting -- at the CTIA Wireless IT & Entertainment show , there seems to be precious little talk of entertainment – the content that is. Most of the talk at the show was about business models -- “How do we make money in mobile?” Carriers are making 15% of their revenue from non-voice services, which sounds wonderful. But, dig a little and you find out that it's mostly wireless internet and SMS. Entertainment on mobile is still really only about ringtones (which account for 10% of the record industry's revenues), wallpapers, and a little about games. And even that, as CTIA itself says, is “beginning to slow." Flattening adoption at a time when multimedia-capable handsets and content choices are increasing dramatically is not a good sign. The area in the chart between potential and actual is expanding. That’s either a disaster or a future opportunity, depending on where you sit.

Even though the mobile content business is looking a little stagnant, venture dollars are flooding in -- there are a staggering number of fresh start-ups: primarily enablers, aggregators, and middlemen, their differences being splits of split-hairs. So many companies chasing a market which people assume will take off like a hockey stick but is not showing signs of doing so.

It feels like supply and demand are way out of whack – and since many of the mobile companies arose from the ashes of the Web 1.0 shake-out, it wouldn’t be surprising if we see a mobile shake-out at some point in the near future. But mobile is here today and it will be a big part of our future. So, after walking around, here are some observations on good decisions that start-ups are making:

(1) Most obviously, companies who are able to attract, directly connect, and most importantly -- keep – paying consumers are well-positioned. After some false starts, it appears that Thumbplay is doing a good job of aggregating content and delivering a compelling value proposition to consumers for off-deck ringtones, graphics, games and video. Of course, their challenge will be to maintain margins as that business gets more commoditized.

(2) There are other B-to-B middlemen that are filling a real need in today’s marketplace. For example, a start-up called Smaato from Germany has an interesting approach to helping the application developers for mobile generate revenue through advertising. They aggregate audience -- essentially linking the companies that are too small to sell ads themselves with the ad-buying service providers who are buying ads on the other side. Their initial customers include many of the leaders in Smartphone apps (e.g. Handmark, Splash Data, Iambic, etc). I like companies that can solve a problem today, volumes being what they are, with a story that just improves over time.

(3) There are people that are asking the ever-important question, “How can we build a cross-platform application that takes advantage of mobile uniqueness?” Two Amazon alums founded Pelago and their product called Whrrl -- a blend of social networking and local discovery. It’s a location-based service that ties you to your network of friends in order to discover restaurants, businesses, etc. wherever you are. What I like the most about what they’re doing is their vision for blending of mobile capabilities (e.g. GPS and passive discovery of where you are and have been) with the Web 2.0-ish features.

(4) On a related note, it seems clear that simple re-purposing of content (e.g. ringtones, wallpapers, or even movies and TV shows) is peaking. What continue to work are games and other pieces of content that are specifically designed for the delivery mechanism. We’ve seen this over and over in Hollywood’s history – the simple brand extension phase gives way to the innovation phase – when people start to use the medium in a way that no other medium could deliver.

No doubt, there is huge future opportunity in mobile entertainment -- we have barely scratched the service on mobile content apps that make great use of mobility. The best news of all is that the more unique and innovative the content-related services become, the more they will survive and stand above the ever-thickening throng.