Labels to delve deeper into ringtones

Money-making scheme no 93

Record companies may buy up mobile phone ringtone providers and are likely to go a step further by setting ringtone studios, a new report says.

In the report, research company Strategy Analytics forecasts that sales of personalisation data services for mobile phones will rise from USD3 billion this year to USD6 billion in 2008. It also said that although the sales will come from services such as mobile phone graphics, icons, screen savers and novelty voice mail, it is ringtones that will dominate.

Compelling evidence to support this claim is already surfacing, with the Japanese Society for the Rights of Authors, Composers and Publishers reporting a doubling of ringtone sales in 2002 over the previous year, with an average of 110 million ringtones being downloaded each month.

What's more, the company's report "Real Music Ringtones: Changing Dynamics in the USD4 billion Ringtone Market," predicts that record companies will consider acquiring ringtone producers and distributors to cash in on the burgeoning sector, although it's also anticipated that the big labels will continue to license their music to independent ringtone producers.

According to Strategy Analytics senior analyst Nitesh Patel, just how directly involved in the sector record companies will become remains somewhat unclear. But what is clear is that over the coming months and years, consumers will begin to demand "real" music ringtones, as opposed to the current simple tones or even the more advanced polyphonic ringtones.

As this demand grows, news ringtones will have to be created using master samples from the big record labels, allowing the record companies to take a more aggressive stance in the sector. Strategy Analytics said that in this environment, existing ringtone solution providers will be forced offer greater value to mobile operators who and record companies if they are to withstand these pressures.

"We see ringtones as a catalyst for record companies to become more actively involved in ringtone market, in light of dwindling CD singles sales, as is often reported, and we advise that this would be a key strategy for them moving forward," Patel said.

While strategy analytics believes that the increasing number of mobile handsets with open operating systems and Bluetooth will make file sharing or file conversion much easier, it advises carriers to remain focused on issues such as DRM (Digital Rights Management) and ease of payment through mobile channels.

According to Patel revenues from the real music ringtone market would help counteract the losses record companies have incurred as a result of MP3 sales and illegal file swapping, and that MP3s, ringtone sales could be monitored much more easily.

© ENN

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