Sales of Ringtones Drop in 2008

Sales trend of ringtones steadily drops

Ringing tones have been popular since cellular phones made them more interesting than the traditional ringing bell. Adding “incoming” signal tones for text messages and multimedia messages as well as voice calls, for which these ringing tones were originally typically set, cell phone manufacturers and service providers hit upon a veritable gold mine that allowed them to market heavily to consumer individuality. The multitude of selectable ring tones provided and pre-set with each new phone model has become more and more diverse and creative, moving from monotone to polytone to “true tone” snippets from songs. This was a reasonably profitable source of additional income for manufacturers and providers.

However, ring tone revenues in general seem to have been declining fairly steadily in recent years, spurred on by the availability of software that allowed consumers to create, customize and install their own tones, as well as handsets and hardware that made the installation process even more user-friendly. This would of course remove the need for purchasing the ready-made custom tones from the providers. As such, “sideloading” of entire tracks, as well as converted and clipped cuts from those tracks, as ring tones has become as increasingly popular as it is increasingly easy.

Another reason for the drop may be the way that ring tones of varying sophistication have become more and more commonplace, greatly reducing the novelty factor that helped propel them into the public consciousness.

2008 was particularly notable for this decline, as figures from SNL Kagan note that ring tone sales dropped considerably last year. The lack of a need for subscribers to acquire their tones through providers led ring tone sales in the U.S. to shrink by 24 percent in 2008 as compared to sales in 2007 ($714 million to $541 million). This decline marked a disappointing first for a U.S. mobile content category. While the rest of the mobile music market remained reasonably strong – growing at a 20 percent CAGR from 2005 to 2008 – the ring tone portion of that mobile music market fell to 63 percent from 80 percent in 2005. This decline mirrors that of CD sales, which media companies were hoping would be offset by digital sales, ring tones included.

The forecast at the moment is that there may be success in labels’ attempts to regain that lost ring tone demand, whether by reducing download costs or making the downloads easier to come by and more accessible, or a combination of both. While this does not address the availability and accessibility of side-loading, it remains a viable tactic that at least eliminates the need to clip and tweak one’s own tones and competitively approaches the overall price of the software and peripherals called for in side-loading.

Another tack would be for providers to focus their energies on the next big revenue generator: ringback tones. Also known as RBTs, these audio clips sound on an earpiece when one places a call, instead of the standard ringing – sometimes a voice clip by the owner, akin to that used on an answering machine, and sometimes a clip taken from a song, and sometimes a themed audio clip from a television show or a celebrity sound byte. These fairly strong sellers are estimated to have grown at a 37 percent CAGR from 2005 to 2008, or $77 million to $199 million, according to SNL Kagan wireless analyst John Fletcher.

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