Wednesday, September 30, 2009

Can Apple Reinvigorate The Ringtone Market?

Earlier in the month, Apple announced that they will start selling ringtones directly on the phone for $1.29 each. Currently, there is an estimated 30 million iPhone owners around the world that have access to the 30-second audio clips that can be downloaded directly to the phone. Considering statistics and research (SNL Kagan's), mobile music sales have declined, marking the first time for any mobile content category. Ringtone sales shrank 24 percent to $541 million in 2008 from $714 million in 2007. Previously, Apple charged 99 cents to convert songs from already owned iTunes music into a ringtone. With the new experience, which is integrated in iTunes on the phone, its suppose to be better and cheaper. In addition, Apple has a number of advantages. First, the ringtones will be integrated into iTunes on the phone and it will also be tied to the user's Itunes account. Convenience and price is are key factors in Apple's re-birthing of ringtones. As stated in the article, in the early days, the prices soared mostly because consumers were willing to pay more, and because they had now way to convert songs they already owned. Ringtone prices have stayed high because ringtone royalties paid to artists have been set higher than full-track royalties. Is $1.29 a bargain? Overall, Apple's involvement in this ringtone revival is crucial. In opinion, with Apple's image behind this movement there will be an increase in ringtone sales. However, this increase will be short lived. Ringtones are constantly battling third-party software which allows users to quickly and easily make ringtones of their favorite songs at little to no cost. However, it will be interesting to see how Pandora and other music streaming services respond to this. With projections of 5.5 billion by 2013 in revenue from streaming mobile services, ringtones have a bright future. However, this is all dependent upon how convenient and cheap Apple or any other mobile music service makes ringtones.

-Ryan Dolan

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