June 26, 2004
America, Get Ready for "Ringbacks"
Business Week publishes an interesting feature article on ring back tones.
"Already in use in cell-phone-crazy South Korea, Taiwan, and other Asian countries, this new wireless service could be coming to the U.S. soon, perhaps in the next year.
Ringback tones promise to give wireless users yet another way to personalize their phones beyond the already wildly popular ringtones, those tunes your phone plays when someone is calling you. In fact, ringbacks may help wireless service providers ring up even more cash than they're making now from ringtones.
That's a pretty sizable market: Last year, ringtone revenues came in at $2.3 billion worldwide, according to telecom consultancy Ovum.
And, in the U.S., more people now download ringtones based on popular songs than they download the songs themselves from the Web's many music services, says Scott Hochgesang, vice-president for business development at Universal Music Group, the world's largest music company. (!)
Indeed, according to Ovum, by 2008 mobile music content -- ringtones, ringbacks, and entire songs that could be wirelessly downloaded onto handsets -- could account for 28% of total music sales, including CDs and paid downloads.
[...] Ringbacks have already proved a success elsewhere. Korea's No. 1 wireless provider, SK Telecom (SKM ), was first to launch ringback tones in April, 2002. It now has more than 8 million ringback users out of its 30 million total subscribers, and SK is generating more than $9 million in revenue per month from the service. That's still small potatoes for SK, which has $7.25 billion in revenues, but it says ringback adoption is skyrocketing.
Another Korean operator, Globe Telecom, has reported that 100,000 people signed up for its ringback service during the week of its launch in April, 2004. No wonder a Sprint PCS spokesperson says: "We are certainly watching this."
Cost doesn't seem to be slowing ringbacks in Asia, where carriers have been able to charge users $2 to $5 a month for a subscription to the service, plus, say, $1 per each new ringback soundtrack. U.S. carriers will likely follow a similar model, says Yankee Group's Zawel. Such fees should push the worldwide market for ringbacks from $148 million last year to $2.4 billion by 2008, according to Ovum".
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