Ringbacks underline mobile, music biz divide

By Antony Bruno

DENVER (Billboard) - If a ringback tone launches on a network and nobody hears it, did it ever really exist?

With the exception of ringtones, no single mobile music application has yet to score an obvious home run with mobile users, even though the number of mobile music products has exploded in recent years.

And while there's been much discussion about how ease-of-use, need for innovation, pricing and so on contribute to the problem, one of the overlooked issues is that of marketing. Talk to any mobile industry executive or major-label representative, and they'll tell you all about how excited they are over ringback tones, mobile video, full-song downloads and such. But ask them to take out their checkbook and pay for some advertising around these services and you'll soon be facing empty air.

Mobile music is the bastard child of mobile and music industry parents, and neither wants to take full responsibility. Both want to make money on mobile music, but both want the other to pay for advertising and marketing needed to generate consumer interest.

Each has its own "legitimate" child that dominates their attention. Both industries make far more money on other products and as such direct their marketing dollars there.

The wireless industry, for instance, is overwhelmingly dominated by voice minutes. Take a look at your mobile phone bill. Unless you're a teenage text-message fanatic, the bulk of that bill is covering your talk time, not for content and services.

CTIA-The Wireless Assn. revealed at its annual conference earlier this month that what it calls "data revenue" now makes up 17% of carrier revenue. That's an impressive 53% increase over the year before. But data revenue to a wireless operator is any cash earned from something other than voice minutes. That includes text messages, corporate e-mail applications, photo messaging, etc. According to data from research firm M:Metrics, only about 15% of mobile users even buy ringtones, and far less buy full songs, ringback tones and other products.

Record labels to a degree are in the same boat. This is an industry built on selling records, and as such its marketing core competencies are based on promoting new music and selling albums, not educating fans on a new technology. Digital music revenue in total contributes roughly 30% to labels' overall revenue pie. Mobile makes up about half that total, with ringtones making up about 75% of the mobile figure. So at best, all other mobile music applications combined contribute maybe 3% to a label's bottom line.