Hanging up on ringtones
By Adam Webb, The Guardian
Although Apple's iPhone is only
released in the US tomorrow, its ringtone has been available for download for
months, picked up by alert listeners to Steve Jobs's demo in San Francisco in
January. Being a MIDI sequence, it's free. Free ringtones? It's enough to put a
shudder through the music and mobile businesses.
Yet they might have good reason to worry. One of the many anomalies of the
mobile music market is that, while a full track bought directly from a network
will cost between £1 and £1.50, a 20- second snippet from the same original can
be priced at up to three times as much. Globally, this has created a
In 2005, German-based content provider Jamba! reportedly amassed profits of
$600m (£300m) on the back of its Crazy Frog ringtone. Meanwhile, cumulative "realtone"
(music tone) sales for R&B artist Akon recently surpassed the 11m mark, greater
than either of his two albums. Realtones generate royalties for record labels
(though monophonic and polyphonic tones, or those from animated amphibians, do
not), creating an unexpected silver lining for the music business which is stuck
in a generally rather black digital cloud.
But if the iPhone and the majority of next-generation handsets is anything to go
by, the future of mobile entertainment lies in "sideloading" - transferring
existing content, such as music, from a PC, as opposed to the more lucrative
(for operators) process of purchasing products over the air.
"I think the ringtone business is in peril now because the operators have
allowed into the market mobile phones which can sideload MP3s and use them as
ringtones," says Andrew Bud, executive chairman of mBlox and vice-chairman of
the Mobile Entertainment Forum.
With nobody able to explain convincingly just why consumers continue to pay a
premium for a novelty product, the ringtone industry is something of a
gravity-defying act anyway. One analyst goes so far as to describe ringtones as
"digital jewellery", with most concluding that their value is a combination of
personalisation and convenience.
According to the digital music business research consultancy Music Ally, the
retail value of the UK's music ringtone market this year will be between £100
and 120m, compared to £30m for full track mobile downloads. With networks taking
a slice of between 40% and 50% from each transaction, this looks slightly less
impressive from the music industry's perspective. But a BPI press release
earlier this month (tinyurl.com/2epp8w) quotes research by Informa Telecoms &
Media that the western European realtone market is set to increase this year by
56%. Surely things can only get better?
However, Informa's analysts were unavailable to explain their calculations. And
certainly sideloading (along with excessive data charges and poor user
experience) is one of three significant roadblocks to bigger sales.
Sideloading highlights some of the mobile market's inherent contradictions. The
facility is essential for handset manufacturers such as Nokia and Ericsson,
which are in effect competing head-to-head with Apple in the MP3 player market.
But that is not necessarily in the vested interest of the networks that want
consumers to buy content over the air, preferably within their walled garden.
Meanwhile, music-enabled handsets able to store hundreds of tracks are
increasingly commonplace - the BPI release notes that 40% of UK phones can play
music files - and if the example of the iPod is anything to go by, the majority
of these will be ripped from CD collections. Notably, the current specification
for Apple's iPhone has no 3G capabilities, and is custom-built for sideloading.
If converting those tracks into a user-generated ringer is similarly
straightforward (as it is on popular models such as Sony Ericsson's Walkman
range) and costs nothing, then the days of the £3 ringtone look numbered.
Mobile measurement company M:Metrics claims that 12% of UK mobile users are
already sideloading their music collections, compared to 2.5% who buy tracks
over the air. Countering Informa's predictions, they also suggest that the
realtone market is, at best, flat, with 1.1 million UK consumers buying one or
more ringtones in April, compared to 1.35 million in September last year.
Anecdotally, record labels agree. Last year, Rob Wells of Universal Music Group
International claimed that the UK ringtone market was in terminal decline.
Whether sideloading will sound its death knell is another matter. Nobody within
the mobile business anticipated the demand for either ringtones or text messages
in the first place, indicating the market's unpredictability, says Music Ally's
Steve Mayall. And since the industry is rife with unrealistic predictions and
hype, that makes it incredibly difficult to assess. "Somebody said yesterday [at
Monaco's Mobile Entertainment Market conference] that mobile content is a $40bn
industry, but it's not," says Mayall.
"It's not even half that. It's not bigger than the entire music or film
industry, and that kind of hyperbole is in danger of hurting the whole business.
The reason that ringtones have been so popular is simply the convenience factor
- and that isn't going away. That ability to make an instant purchase is still
there, and businesses can still make a decent amount of money from ringtones."
But the fact remains that some fundamental changes will be necessary if this
digital jewellery is to retain its allure. Seth Jackson, MD of marketing and
distribution company Indie Mobile, says the future will most likely be a bundle
(where, for a couple of quid, you'll get a full track, a ringtone and a video).
Elsewhere, innovative products are being introduced: EMI, for instance, has just
unveiled a remixable realtone for the hip hop artist MIMS, while independent
labels such as Ninja Tune are using them as freebie promotional tools.
What is certain is that prices cannot remain static. And as with moves to
incorporate VoIP services and flat-rate data charges, it is innovation that will
move the market forward, rather than the protection of any perceived golden
"You can look at something like sideloading in two ways," Mayall says. "You can
either say this is bad for the business as they're not getting money from OTA
[over-the-air] downloads or ringtones, or you could say that it's encouraging
people to think of their phone in a different way, and as a potential music
player. Once you've got that notion established then you can build business
models off the back of it. And that's really the way they're going to have to