Hanging up on ringtones
With the market for downloadable over-the-air content flat, operators and music companies are looking to other ways of making money from mobiles, says Adam Webb — Although Apple's iPhone is only released in the US tomorrow, its ringtone has been available …
Context & Ripple Effects
The ringtone business has been running out of steam for over a year: the New York Times flagged the phenomenon back in June 2006 with its look at a ringtone meant to fall on deaf ears, and the Guardian's May 2007 piece on free downloads pressed on the wider question of whether anyone will keep paying for over-the-air content. With that market now flat, operators and music companies are openly hunting for replacement revenue streams from the handset.
First-order effects
- Operators and record labels lose one of their highest-margin mobile content lines at once — ringtone and OTA download income stalls just as they need it most.
- Apple enters the picture from the device side: its US iPhone release lands tomorrow, with its own ringtone already available ahead of launch, putting a platform player where carriers used to sit.
Second-order effects
- Carriers are already mobilising against the threat — European and US mobile phone groups have spent the past fortnight plotting how to take on the iPhone — because whoever controls the device increasingly controls which content store the customer uses.
- Music companies face pressure to reprice or repackage mobile rights, since a flat ringtone market weakens their leverage to charge premium rates for short clips licensed to operator decks.
Third-order effects
- If the pattern holds, mobile content revenue migrates from carrier-run walled gardens toward device makers and software platforms — an unconfirmed internal signal that the same OS X software logic may extend across Apple's portable lineup points in exactly that direction.
- Regulators and label lawyers would then face a structural question rather than a product question: who licenses, who bills, and who gets paid when the handset, not the network, is the storefront.
The trend: Mobile content economics are shifting from carrier-owned download stores to device-maker platforms, with the flat ringtone market as the visible crack in the old model.