overview
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Guides:
Intellectual
Property
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issues
This note considers mobile phone ringtones.
It covers -
IP aspects
Intellectual property owners (including composers, record
companies and performers) have sought to share in revenue
from the ringtone market. Their participation reflects
national (eg the Australian Copyright Act) and international
legislation/agreements.
In Australia licensing has been undertaken by the AMCOS
and APRA copyright collecting societies,
not-for-profit bodies that act on behalf of intellectual
property rights owners.
The Australian regime involves discrete rights in making
and supplying ringtones: reproduction of musical works
and communication of those works to the public.
AMCOS authorises reproductions that include initial 'fixing'
of the work in ringtone file formats, reproduction of
that ringtone onto a server for downloading onto mobile
phones, reproduction of the ringtone onto a web page for
a 'preview' of the ringtone to potential customers and
reproduction of the ringtone onto a mobile phone. Licence
fees typically are a one-off $10 for the initial fixing
and 10% of the retail price of the ringtone (subject to
a minimum $0.15 fee per sale).
APRA authorises transmission of the musical work as a
ringtone from a server to a mobile phone and the communication
of 'previews' via a streaming media application. For monophonic
and polyphonic tones its fee is currently 1% of the ringtone's
retail price, subject to a minimum $0.015 fee per sale,
and for 'phonographic' ringtones (ie actual sound recordings)
the fee is 2% of the ringtone's retail price, subject
to a minimum fee of $0.03 per sale.
Similar arrangements are evident overseas. In 2001 the
US IP rights management group Harry Fox Agency (HFA),
which represents around 27,000 rights owners and has a
handle on much of the music in the US, announced that
it was licensing ringtones on behalf of copyright owners.
Hilary Rosen of the RIAA said
This
agreement removes a major legal roadblock for the new
online subscription services. The coming subscription
services may now begin licensing thousands of musical
works immediately. For consumers, this will essentially
mean they will have access to more and better online
music options, sooner.
HFA
plans to issue licenses for subscription services that
offer on-demand streaming and limited downloads. After
rates are set, royalties will be payable on a retroactive
basis from the start of those services. The RIAA will
make an advance payment of US$1 million toward the royalties,
with publishers having an opportunity to opt out of the
licensing agreement.
consumer questions
An industry that features high volume sales to youth demographics
of low margin ephemera has inevitably attracted some deceptive
or merely inept operators. In Australia and overseas there
are recurrent complaints to government and industry regulators
about poor practice, including non-delivery of service,
obscure terms & conditions or difficulty in gaining
release from agreements.
During 2005 for example the UK premium rate telephone
services regulator Icstis fined mBlox, the service provider
behind the execrable Crazy Frog ringtone. mBlox was ordered
to refund consumers who were unaware that they had signed
up for a subscription service (at up to £5 per week)
rather than a one-off product.
Icstis commented that
while
a great deal of thought had been put into producing
the Crazy Frog advertisements, the same could not be
said about the terms and conditions ... the companies
concerned showed a careless disregard and unprofessional
attitude to consumers in failing to be clear on the
exact nature of the service.
The
industry does not seem to have been responsive to such
criticisms. In July 2008 EU Consumer Commissioner Meglena
Kuneva reported on several hundred services (estimated
as worth US$1.1bn in 2007), claiming that many were "misleading"
consumers.
Far
too many people are falling victim to costly surprises
from mysterious charges, fees and ringtone subscriptions
they learn about for the first time when they see their
mobile phone bill.
Salient
criticisms by Kuneva were -
- unclear
price information, with prices being incomplete, not
including taxes, or expressed so that customers were
unaware that they were signing up a subscription.
-
large numbers of sites did not provide some of the required
contact information about the trader.
- "hidden
charges", with key information being hidden in
very small print (or in a difficult-to-find part of
the site) or the word "free" being used to
mislead consumers into a long-term contract
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