Ringing in the New Year.(increasing demand for ringtones)
By Sue Marek
Real-song ringtones, or true
tones, are gaining stature as record labels team with operators to release new
singles in ringtone format before the songs even hit the airwaves.
Remember the sound of an old-fashioned standard cell phone ringer? That sound
may soon become extinct as personalized ringtones - whether monophonic,
polyphonic or true tones - become increasingly prevalent.
As those personalized ringers increase in popularity, wireless operators and
record labels are pushing the envelope to keep customers ringing up repeat
ringtone sales. The latest innovation - exclusive ringtones - allows customers
to download a ringtone of a song before the single hits the radio stations or
the CD appears on record store shelves. But does exclusive status equate to more
ringtone sales? Will customers buy a ringtone when they aren't familiar with the
Die-hard fans of the artist will buy a ringtone even if they haven't heard the
song yet, and industry insiders say both the wireless operators and the record
labels stand to gain from the excitement an exclusive ringtone can create over a
single. Additionally, carriers benefit because it can help get customers to
migrate from polyphonic ringtones to the true tones, which are higher priced.
"Both the carrier and the record label win in this arrangement," says Kanishka
Agarwal, vice president, new products at Telephia. "Carriers want the higher
premium with true tones. And already we see that consumers are willing to pay
for personalization. Plus they are adding a time element - you are the coolest
if you have a true tone that hasn't been released yet."
Status vs. Sales Nearly all the Tier 1 operators have tried this strategy, but
Cingular Wireless is perhaps the biggest proponent with its Cingular Sounds
program. Launched in April, the service features Coldplay's "Speed of Sound"
single from the rock group's X&Y album. The ringtone debuted April 12, but the
record wasn't available until June 7. The operator has launched similar
campaigns with singles by artists such as Gwen Stefani and most recently the
"Don't Give Up (Africa)," a song performed by Alicia Keys with 100 percent of
the ringtone sales going to a nonprofit group that provides lifesaving AIDS
medicines to children and families with HIV/AIDS in Africa.
Jim Ryan, Cingular's vice president of consumer data services, says that besides
the altruistic benefits of the Alicia Keys ringtone, it also offers significant
crossover appeal. "This is a Peter Gabriel song, so there is a generation of
folks that love this song and don't necessarily download a lot of ringtones," he
says. "We think this will expand the appeal of ringtones and help out a great
Ryan wouldn't provide specific sales numbers on Cingular Sounds' exclusive
ringtones. However, he did say that some of the ringtones offered through this
program have been extremely successful. "When we pick the right artists and
package it, we sell more ringtones than we would have otherwise," Ryan says.
"Customers see it as a value-add and the artist sees it as a value-add."
Of course, much of that success is based on the packaging and the promotions.
Mary Stuyvesant, vice president of marketing and merchandising with InfoSpace,
which works with Cingular on its ringtone program, says record companies are
interested in exclusive ringtone promotions because they generate excitement
about the single. For example, when Cingular debuted the Coldplay ringtone, the
carrier sent phones with the downloaded ringtone to radio stations across the
country. "DJs played the ringtone of the song on the air," Stuyvesant says.
Still, she admits that for most exclusive ringtones, consumers must make a leap
of faith because many carriers' download systems don't allow customers to
preview the ringtone before they buy it. "For most artist and releases, I don't
think that it is a successful model if the measurement of success is purely
transactional," Stuyvesant says.
However, if the measurement of success is branding and strategy, it's very
successful, she says. "If part of your strategy as a carrier is to offer
exclusive content so that people want to subscribe to your service, this is a
New Distribution Channel Cingular isn't the only company using exclusive
ringtones to generate excitement, tap new markets and elicit more sales.
Broadcast television networks and even cable channels are starting to tie in
mobile content purchases with popular shows as a way to entice viewers to
purchase ringtones and perhaps other types of content.
CBS and Capitol Records launched a cross promotion of Coldplay's single "Talk"
by embedding it into a Nov. 30 episode of the hit show "CSI:NY." In the episode
of the drama, a lead character is investigating a case when his cell phone rings
and the ringtone is the single "Talk."
Following the scene, CBS ran promotional messages alerting viewers about how to
purchase the ringtone, which was available exclusively for one week from
operators T-Mobile USA, Cingular Wireless and Sprint Nextel. At deadline, CBS
hadn't yet offered any insight into the success of this campaign.
This type of cross-promotion between wireless operators and broadcast or cable
channels is becoming more prevalent, particularly as record companies and
wireless carriers look for ways to sell ringtones to new audiences. Stuyvesant
says operators typically stack their top deck with ringtones from artists who
likely will appeal to the teen and young adult audience because they generally
buy the most ringtones.
But those ringtones don't necessarily appeal to older purchasers, and most
buyers don't want to sift through pages of ringtone listings on their phone to
find an appealing selection. Plus, this provides little opportunity for new
artists who may not have developed a ringtone following.
The ability to sell ringtones and other mobile applications to a specific
audience was the impetus behind BET launching its mobile service BET Mobile. The
cable network, which targets African-American consumers and is available in more
than 80 million U.S. homes, is enticing viewers to buy ringtones by having them
text message codes displayed during music videos.
The ringtone purchases aren't exclusive; instead, the music video is used to
entice the viewer to make the ringtone purchase. BET Mobile is starting with
ringtone sales but plans to progress to other mobile content, including
Although the ringtone purchase isn't being made through the wireless operator's
deck, the operator plays a key role in the purchase because it has the billing
relationship with the customers, says Ryan Wuerch, chairman and CEO of mobile
content solutions provider Motricity.
"The carrier is a key part of the system because they are the billing party,"
Wuerch says. "Even though this is off their deck, they will see great growth
potential from this because they are still receiving a piece of the overall
Wuerch sees the BET deal as a big step for mobile content distribution, which so
far has been limited to the carriers' top decks. Off-portal content distribution
has been growing, but many of those companies lack consumer awareness.
The BET deal couples off-deck purchasing with a huge marketing and promotion
channel. "BET is a paradigm shift. This is a huge brand that is a large
distributor for record labels. Instead of launching an MVNO, this is how BET is
going to do their mobile business," Wuerch says.
However, Wuerch admits that requiring consumers to text message a certain short
code to purchase a ringtone isn't the most streamlined purchasing process,
particularly given that text messaging in the United States hasn't been as
popular as it is in Europe and other countries.
Motricity is looking at other purchase modes. Although Wuerch wouldn't provide
specifics, the company hopes to introduce something this quarter that will
improve the process.
Although much of the recent buzz around mobile music has focused on full-track
downloads, ringtones are still the most popular mobile content purchased by
consumers. With exclusive ringtone deals and new distribution methods, such as
the BET Mobile deal, wireless operators are attracting new buyers and enticing
repeat purchases - and that's a strategy that may keep the sector from growing
stagnant even as attention shifts to full-track downloads.