Ringtone pioneers branch out to survive

By Antony Bruno

SAN FRANCISCO (Billboard) - As lucrative as the global mobile music business is today -- projected to be worth $9 billion by the end of the year -- times are tough for the companies that started it all.

Early ringtone aggregators like 9Squared, Dwango, Faith West (now Moderati), YourMobile (now InfoSpace), Zingy and others have spent the past 18 months scrambling for new ways to survive in a mobile music market that has changed dramatically since their heyday at the turn of the millennium.

Through the creative leveraging of their technology assets and music industry contacts, these companies are developing new mobile services and applications in an attempt to remain relevant.

The mobile entertainment and music industries are at present inexorably linked. Ringtones and other mobile music revenue contribute roughly half of the total digital revenue collected by record labels today. At the same time, music-related applications make up nearly 70 percent of all mobile content sales -- essentially carrying the nascent mobile entertainment industry.

Clips from a song's master recording have replaced the tinny, synthesizer-based polyphonic ringtones that served as the genesis of today's ringtone market. As of the end of 2006, polyphonic ringtones make up less than 15 percent of today's ringtone sales, with master ringtones being the dominant and preferred format.

BLINDSIDED AND SIDELINED

"The polyphonic business, which used to be thriving, is pretty much dead," says Scott Jensen, vice president of global business development at Zingy. "It's now master ringtones and full-song downloads."

This change in format was a disaster for ringtone companies. In the polyphonic age, they licensed the music and created the ringtones, and sold them on wireless operators' networks and phones in return for a cut of the sale.