Are Ringback Tones The Holy Grail?
At least for the moment, they do seem to be for the revenue model starved mobile-music industry.
Ringbacks - the music you hear when you call someone - represent the only area of significant growth for mobile music-related applications in the last year. The number of mobile subscribers who reported purchasing a ringback tone increased 69% from February 2007 to February 2008, according to data from M:Metrics. By comparison, neither ringtones nor wallpaper images could keep pace with the overall market growth, increasing by only 4.3% and 6.2%, respectively, in the same time frame.
For a music industry that has long relied on ringtones to pad its digital revenue pie, this has several implications, both financial and promotional.
According to figures from BMI, U.S. ringtone revenue fell slightly more than 8%, or $50 million, in 2007, and is expected to fall another $40 million, or 7%, this year to $510 million - a sharp decline from the peak of $600 million in 2006. Yet ringback tones are more than compensating for the decline. Ringback sales are expected to increase 50%, or $70 million, to reach $210 million this year.
And while total ringtone revenue is almost twice as large as that from ringbacks, research group IDC says global ringback revenue will outpace that of ringtones by 2010.
Operators such as Verizon are trying to bundle ringbacks with ringtone sales - customers choosing to buy a ringtone will receive a prompt asking if they want to also buy the ringback tone for the same track - and sell both in one transaction.
Beyond simple sales figures is how ringback tones are used to promote new releases and exploit back catalogs. While both are basically 30-second clips of longer songs, ringtones and ringbacks are fundamentally different applications.
Only those calling a ringback user can hear the clip, while ringtones are audible to anyone in the vicinity of the phone. Going further, ringbacks can be set to play only for specific callers, like the wife or best friend of the owner of the phone.
Therefore, there’s an opportunity to make the song a personal message. [Via]