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overview
This note considers mobile phone ringtones.
It covers -
It
supplements discussion elsewhere on this site regarding
intellectual property, the economy
and networks.
introduction
Until the advent of the iPod the commercial provision
of ringtones was the most profitable online music sector.
Improvements in mobile phone hardware and in networks
has allowed fashion-sconscious consumers to 'personalise'
their devices by adopting a synthesised tune or - more
recently - a clip from a standard audio recording as a
replacement for the standard ring, beep or brrr.
Some of those tones were created specifically for the
ringtone market, predominantly female and under thirty.
Others recycle contemporary or even classical music recordings,
generally through licensing by one of the major record
companies.
basis and industry
Monophonic ringtones, as the name suggests, involve the
mobile emitting one note at a time. Polyphonic ringtones
comprise of note sequences that play simultaneously and
concurrently, so that the phone emits chords and melodies.
Both tones use MIDI files, essentially a set of instructions
for the mobile's synthesiser rather than a true audio
recording. RAF (Recorded Audio Format) ringtones - aka
'Realtone' or 'Trutone' - consists of a compressed digital
audio file similar to MP3 and encrypted for use only with
compatible handsets. It enables the user to have real
audio as a ringtone.
The ringtone market features competition between mobile
phone service providers, mobile phone hardware suppliers,
record labels and third parties such as Napster and Jamster.
Several record companies sell ringtones of their bands
on their sites.
In contrast to Europe, where many mobile networks provide
their own ringtone services (typically on a 'per download'
basis), the Japanese market is dominated by third party
content providers and many ringtones are downloaded directly
from the particular provider's site (with a fee being
charged to the consumer's phone account. Japanese consumers
have moved to a subscription based mechanism, with the
consumer paying a set monthly fee to download ringtones
on a regular basis.
Global expectations of growth centre on expansion of the
'ringback' market, expectations that are likely to be
misplaced. Ringback tones (aka caller tunes - or perhaps
more aptly bling tones) let the consumer decide what music
- typically a song - the caller hears when making a call,
in contrast to ringtones (where the recipient of the call
has the ability to choose the noise that signals an incoming
call). Ringback tones involve automated downloading of
a snippet of audio to the caller's 3G phone whenever a
call is made to a ringback device.
Visions that ringtone providers will be able to leverage
their operation to build large-scale mobile content businesses
independent of telecommunications companies are problematic.
In 2005 UK-based Itouch was bought by Japanese mobile
content firm For-side.com for £180m. Ten months
Itouch was up for sale, as For-side.com pulled back towards
Japan after a spree that saw seven acquisitions, including
the mobile entertainment unit of Finnish company Saunalahti,
and pressure from competitors such as such as Italy's
Bongiorno and US-based Infospace.
During September 2006 Murdoch's News Corporation paid
US$188 million for 51% of Jamba (the German company responsible
for 'Crazy Frog' ring-tones). Jamba had been acquired
by VeriSign for US$273 million in 2004.
In 2007 ring tone provider Musiwave announced that it
was being purchased by Microsoft for US$50 million as
part of MS plans for "connected entertainment".
Openwave Systems had acquired Musiwave in 2005 for US$121
million.
market size and demographics
Estimates of the current size of the ringtones market
and its future growth are contentious. As with many upbeat
forecasts highlighted throughout this site, it is clear
that some advisers were wildly over-optimistic.
By 2007 the market for ringtones in advanced economies
appears to be shrinking (in terms of number of tones downloaded
and aggregate revenue), with growth likely to come from
consumers in emerging economies (although intellectual
property rights owners are likely to continue to have
difficulty in making money in those markets).
In 2004 Juniper Research and the ARC Group published studies
on the global ringtone market, claiming that it was worth
between US$1 billion and US$3.3 billion in 2003, supposedly
up to 10% of the estimated US$32.2 billion global music
market.
Juniper claimed that the ringtone market peaked in 2003
at US$1 billion, with a forecast that it will halve by
2008. ARC, in contrast, claimed that the market was US$3.3
billion and would double by 2008. Most of the current
market was in Europe and Asia (principally Japan and South
Korea), with slower uptake in the US.
In mid-2005 Broadcast Music Inc. (one of the leading music
rights management bodies)projected that the US ringtones
market would surpass US$500 million in retail sales in
2005, following sales of US$245 million in 2004 and US$68
million in 2003. IDC Research had estimated that ringtone
sales in the US were almost US$17 million in 2002, US$18
million in 2003 and US$375 million in 2004.
The 2005 Australian Mobile Phone Lifestyle Index by the
Australian Interactive Media Industry Association (AIMIA)
claimed that 30% of respondents had purchased a ringtone
in the preceding 12 months, with most respondents purchasing
an average of three ringtones and two games. The 13-16
year cohort purchased significantly higher numbers of
ringtones, logos, screensavers and accessories. Females
bought more ringtones; males among AIMIA's respondents
bought more games.
UK specialist Xingtone.co.uk claimed regional differences,
with residents of large UK cities or towns (72%) being
more likely to embrace ringtones than their rural counterparts,
although there was supposedly greater take up in Scotland
(26%) and Wales (23%) - ahead of London (18%) and the
Midlands (12%).
US-based PWS boasts that its customers downloaded 59 million
tones during 2002, with a UK competitor claiming that
it was providing 10 thousand downloads per day.
ARC forecast in 2004 that ringtone downloads would outpace
the market for listening to songs on mobile phones and
other wireless devices. Depending on whose crystal ball
you polished, 551 million users worldwide might buy ringtones
in 2006, with only 112 million users listening to MP3
files on their mobile phones.
By 2007 there was disappointment. M-commerce specialist
M:Metrics claimed that the percentage of mobile phone
subscribers in the UK, Germany, France, Spain and Italy
recurrently buying a ring tone had fallen consistently
over the past year, to a low of 3.4% in the UK. The corresponding
figure in the US was a slump to 9.3%.
JupiterResearch claimed that ringtones accounted for 29%
of the overall European mobile content market in 2007,
down from 33% in 2006 (with a value of US$1.1 billion),
in contrast to a 33% increase in the value of mobile games
(US$550 million).
futures
The next big thing in the ringtone market within advanced
economies is lilely to be video ring tones.
Some service providers are for example offering short
music videos, cartoons and sports clips to identify callers.
That video appears on the recipient's mobile phone or
PDA when the subscriber's call comes through.
next page (ringtone
issues)
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