Will Ringtone Spinoffs Ring Cash Registers?
LOS ANGELES (Billboard) - The
trend of personalizing one's mobile phone with music has proved quite lucrative
for the world's record labels.
Ringtones, once dismissed as nothing more than a passing fad, have become a $3
billion worldwide market. But it's a market that is nearing maturation, with
growth rates expected to fall to about 20% this year after doubling in 2005.
As a result, labels are now preparing different types of music clips they hope
consumers will buy to personalize other mobile phone features.
"There's a lot of potential to provide great music personalization beyond the
ringtone," says one major-label source, who asked not to be identified, citing
sensitivities of ongoing negotiations with wireless operators.
Within a matter of weeks, several wireless operators are expected to introduce
musical "alert tones"--a snippet of a song lasting between two and five seconds,
that users can assign to play when they receive incoming text messages and voice
mail, similar to a ringtone.
Sony BMG offers a series of spoken-word alert tones from such artists as Anthony
Hamilton and Cassidy, available on all major wireless carriers. Company sources
say they will expand the selection to clips of actual songs as well once U.S.
wireless operators request them. Sources say Universal Music Group has converted
"hundreds" of tracks into alert tones, including Nirvana's "Smells Like Teen
Spirit," 50 Cent's "Candy Shop" and "In Da Club" and Gwen Stefani's "Hollaback
Girl." Universal, the world's biggest record company, also is creating original,
made-for-mobile alerts tones by "key artists."
Warner Music Group executive VP of digital strategy and business development
Alex Zubillaga pointed to alert tones as the label's next mobile music push
during a speech in Germany. EMI Music Group has voiced interest as well.
With 9.8 billion text messages sent per month, according to the Cellular
Telecommunications & Internet Assn., a trade group, it is plain to see why
labels and carriers are interested in monetizing that function.
"There's a wide portfolio of products and services that broaden our
relationships with the labels," says Nancy Beaton, Sprint GM of wireless music
The question is, will subscribers want to buy them? The market for music-related
phone personalization options is getting a bit saturated--ringtones, video
ringtones, wallpaper images, ringback tones, alert tones.
And it doesn't stop there. A company called Endtones seeks to replace the
beeping that occurs when a call has been dropped, concluded or otherwise
disconnected with a musical alert. Another, PhoneBites, has a service called
Razz that enables phone users to insert audio clips into active conversations,
outgoing messages and voice mail.
However, it may be too much of a good thing. "The personalization thing would
appear to be played out," says Seamus McAteer, executive VP/senior analyst at
mobile monitoring firm M:Metrics. "There are lots of ways music can be used to
make a statement or add context, but it can go from the sublime to the
ridiculous. You can't just add a jingle to everything you want to do with a
phone. There are limits."
Ringback tones in particular have shown a lot of promise but have yet to
deliver. When first introduced by SK Telekom in South Korea in 2002, ringback
tones attracted 6 million subscribers in just nine months.
In the United States, growth has proved much slower. Boost Mobile, Sprint,
T-Mobile and Verizon Wireless all have offered ringback tones for more than a
year, but collectively have attracted only 3.6 million subscribers as of March,
according to M:Metrics.
While that's a 350% growth rate over the 1 million reported in March 2005, it's
still a drop in the bucket compared to ringtones, which in the same month were
downloaded more than 19 million times.
Yet McAteer projects the United States could see more than 10 million ringback
tone subscribers by the end of the year once other carriers enter the market.
That move is expected this summer.
"Ringback tones are going to take off," he says. "They are the big sleeper right
now, but you'll see a tipping point with these things where they'll start
doubling every month."
Record labels also hope ringbacks and ringtones will prove crossover hits beyond
mobile phones. Ringback tones use technology embedded in the phone network, not
the handset. This means traditional landline phone carriers can offer the
service as well.
Meanwhile, Internet telephone service provider Skype hopes the ringtone
phenomenon will prove as popular on its service as it did for mobile. The
company has struck master ringtone licensing deals with EMI Music Publishing,
Sony/ATV Music Publishing, Warner/Chappell Music and WMG (Billboard, May 6).
These efforts may seem a bit far-fetched. But so did ringtones at one point.
Neither the music nor the wireless industries plan to second guess the
possibility of an equally lucrative fad catching hold in the future.
"When we first saw ringtones in '98 it was just a gimmick," McAteer says. "But
they've become a mainstay for the music business. So I don't want to
underestimate anything. You just don't know."