Lucrative ringtone market sets precedent for future of mobile.

The UK market for music ringtones is expected to top 52m [pounds sterling] in 2002 and will drive the use of the mobile phone as a marketing tool over the coming years.

The claim was made at a Music And Mobile seminar last week organised by the Mobile Marketing Association (MMA) and attended by around 50 leading players from the music and new media industries, including representatives from BMG, HMV, Vitaminic, marketing agency Aerodeon and Finnish ringtone specialist Iobox.

Iobox has 70m ringtone customers in 40 countries and licences music from a number of record companies including BMG, EMI and Telstar, as well as music brands such as the BBC's Top Of The Pops.

The company's head of product and business development Antonio Varas says mobile industry estimates suggest that UK revenue from ringtones will reach at least $75m (53m [pounds sterling]) this year, before rising significantly.

The growth will be fuelled by new technology which will enable handsets to play polyphonic ringtones rather than purely monophonic ringtones. This will improve the quality of the music and eventually allow full music delivery.

"Mobile marketing is a key way to reach the young because more then 40% of seven- to 16-year-olds have changed their ringtone at least once, 28% do so every month and 3% daily," he says. "They are not worried about paying between 1.50 [pounds sterling] and 4.50 [pounds sterling] for a music ringtone."

He expects the UK to follow the example of Japan, where the three largest telecom companies have 11m subscribers who buy three ringtones a month on average, creating a market worth $330m (230m [pounds sterling]).

In the UK, TV and movie themes are the most popular ringtones, accounting for 27% of those purchased, followed by chart tracks (24%), classical (18%) and old pop and rock (17%). One of the growth areas for 2002 is expected to be Bollywood music.

The MMA acknowledges that the subject of digital rights has still to be clarified. There remains concern that, as mobile technology develops, users will forward ringtones they have paid for to their friends for free, while full music delivery will mean a ringtone is effectively broadcasting a track to anyone who can hear the phone ringing.

Digital music distributor Vitaminic UK, which bought Peoplesound.com last year, has signed a new online licensing agreement with MCPS and PRS to create a single royalty percentage for all kinds of digital distribution, from streaming to downloading.

Peoplesound.com business development director Simon Miller says the mobile phone offers new opportunities to market music, but labels must be prepared to make content available.

Vitaminic will launch a music dedication service in the UK this year. Consumers are sent a text message telling them to dial a number to hear a special dedication from a friend and a chosen track. The service was tested in the Netherlands and Portugal for Valentine's Day.