July 30, 2004
Ring leaders
The meeting of music and telecommunications has become a billion-dollar industry, reports sj-r.com in a well rounded article on the business of ringtones.
"According to a study released earlier this year by London-based analysis firm The Arc Group, ringtones generated global sales of $3.5 billion - roughly 10 percent of the $32.2 billion worldwide music market.
When the technology took off about five years ago, cellular service providers in Asia and Europe dominated the market. According to The Yankee Group, a market-research firm in Boston, American ringtone sales are expected to hit $140 million by year's end.
The drive comes from both the proliferation of teens with cell phones and a music industry watching its CD sales decline. Calie Shackleford, regional public relations manager for Cingular Wireless, says some music labels are seeing more money from ringtones than CD sales.
On average, music companies that license the songs recover 30 percent to 50 percent of the customer cost per ringtone (typically a one-time cost of $1.49 to $1.99 per selection in the United States).
"Ringtones are fundamentally different from other types of music because it's a functional product," says Carolynne Schloeder, president of Modtones, a California-based ringtone provider. "People laugh at ringtones like we're a funky product on the side, but it's a really good business.". Hear, hear!.
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