Ringback tones: revenue at our doorstep.(Cellular)
Author: Borne, Steven

The search for "the next ringtones" has another contender, and this time everything seems to add up.

Question: Name a service that launched with only a handful of compatible handsets, provided AM-radio sound quality, was barely marketed, but still managed to become a multibillion-dollar industry in three years.

The answer: ringtones. In 2000, few people knew that phones were capable of more than just R2-D2 beeps, let alone sounds capable of creating a multibillion-dollar industry. But two years later, the UK ringtone market was already driving $71 million in revenue, according to the Mobile Data Association. Today, the worldwide ringtone market is worth more than $2.5 billion, according to an April 2004 Yankee Group study.

That success begs a question: Are ringtones as good as it gets?

What's a Ringback Tone?

Ringback tones replace the standard ringing sound heard when a call is connected and you're waiting for the other person to answer. Rings are replaced with content such as music, jokes, or funny quips that entertain waiting callers. One way to understand ringback tones is that, like ringtones, they replace a run-of-the-mill sound with something fun and creative. Ringback tones are selected and controlled by the person being called.

A common trait is that ringtones and ringback tones both represent ways for service providers to tap new revenue streams. With ringback tones, service providers can leverage the things that helped make ringtones a hit, such as the ability to personalize and liven up something otherwise mundane. However, ringback tones provide a new twist: they allow users to express themselves to the people who matter most--the people who are calling. From an operations perspective, carriers can utilize many of the same ringtone management tools and content relationships. The difference is that ringback tones offer a much more lucrative business model.

Why Ringback Tones?

Why do ringback tones have a brighter future than ringtones? One reason is that they work with any phone, old or new, wired or wireless, because the service resides on the network rather than...