By Steve Wallage, Wed Apr 23 08:00:00 GMT 2003
The ringtone market is still blossoming with innovation, particularly in Japan.
In the fast moving mobile industry, ringtones are starting to look like a mature market. The excitement seems to be moving from audio to video, and the high levels of acquisition and consolidation in the ringtone market is typical of an industry approaching commoditization. Yet, the ringtone market remains a surprise to many, and still has a lot of life in it.
How Big is the Pie Really?
The ringtone market is incredibly difficult to measure. It is extremely fragmented with a multitude of small suppliers. In Europe and the US, many of the entrepreneurs who moved into the ringtone market had previously been mobile service providers. Interestingly, many also came from the fixed market, former resellers who found this market quickly commoditizing. The Japanese market saw an influx of ringtone providers from companies who had previously been involved in the karaoke industry.
This fragmentation makes a 'bottom up' assessment of market size almost impossible. A 'top down' approach can be roughly estimated from royalty payments, although this makes the major assumption that all royalty payments are actually paid, and accounted for in the same way. This approach suggests a global market of around $1 billion, which is very conservative.
Looking at frequency of ringtone purchases better shows the impact of this market. NOPWorld (UK) found that 32% of UK adults aged 15-34 years had purchased a ringtone in the last three months. It has been estimated that more than 1.5 million ringtones are purchased on the Internet each month in North America.
Many younger mobile users in Japan change ringtones on a monthly, or more frequent, basis. Leading provider, Xing, has over seven million paying ringtone subscribers.
The Next Wave
The ringtone market is still dominated by the music charts. The breadth of ringtones being offered will continue to broaden. In the US, Moviso TruTones offers ringtones with the voices of more than 70 celebrities, and FXTones with more than 60,000 sound effects. These retail from $1.50 to $2.99 per ringtone. In Japan, there is increasing specialisation and diversification in ringtones. Yamaha offers "Guitar Hearts" and "Piano Hearts" for fans of those two instruments.
Another Japanese provider, Composite, offers subscribers the opportunity to remix songs by changing the volume of each track, changing the tempo and adding effects.
In 2002, NTT DoCoMo started offering MP3 downloads as part of its M-stage service. This required a specialized device and was marketed as an opportunity to preview songs. Now, KDDI has launched the service aimed primarily at the ringtone market. It allows 15 to 30 second MP3 clips to be downloaded for around $0.75.
Japanese ringtone providers have also offered mobile karaoke applications, allowing subscribers to 'practice' songs. This service has been widened to include images, and users can send up to four photos which can be 'watched' while the audio clip is playing. This mixing of images with ringtones will become more widespread.
Another innovative company is Korean Danal which has the wonderful company slogan, "we will do our best to make your dreams come true". It offers remix opportunities including adding your own voice and mixing different noises.
A real push to the ringtone market will be the launch of new mobile handsets with advanced audio functionality. One example is the Yamaha 16-voice polyphonic MA-2 sound generation chip. It uses FM sound synthesis, and the Yamaha devised SMAF specification for multimedia files which can be played back on hand-held portable devices.
With enhanced audio capabilities, it is also hoped that musicians will develop music specifically for the ringtones market. A potential new market for the musicians for sure.
New Way of Selling
The ringtone market will also be helped by new distribution opportunities.
An innovator in this space is Moviso which is offering mobile prepaid cards for ringtone sales in the US. This will initially be through more than 6,000 stores including 7-Eleven, Wherehouse Music, other regional retailers and leading wireless carriers.
Consumers dial a freephone number or visit a website listed on the card, enter the PIN number, select the content they want and the ringtone is immediately sent to the phone. The card costs $4.99 for three ringtones. More of this type of players will emerge.
Crossing National Borders
The innovation and experience of Japanese and Korean companies puts them in a strong position for international expansion. However, no noticeable expansion has generally happened, yet. There is some sign of greater efforts by Japanese and Korean companies to enter other markets, but they need to look to co-operation and acquisition opportunities to meet the needs of individual country markets.
Apart from the differences between country markets, it has been for two main reasons. First, the focus of the Japanese companies on i-mode, and their reliance on European markets where i-mode is being offered. Second, the copyright problems - this varies by country and is highly fragmented in some markets. This is unlike the situation in Japan with one centralized body - the Japanese Society for Rights of Authors, Composers and Publishers.
Desire for Individuality
There is no doubt the ringtone market will continue to evolve and grow.
As mobile devices gain improved audio capabilities and ringtone providers around the world consolidate and copy the best ideas, the ringtone market will continue to evolve. It will continue to be aided by the fact, that in a world with an awful lot of mobiles, people do want a touch of originality and their very own, personal ringtone.
Steve Wallage works and writes for the451. Steve has more than 13 years of experience as a technology analyst specializing in telecommunications.