There is growing disquiet among the music industry about the health of the Ring Tone market. Labels and rights bodies are seeing some disappointing revenue metrics and some feel that the Ring Tone sector has had its high watermark and is entering a period of decline. There is no doubt that some labels have seen some decline but that does not mean that the market is necessarily in freefall.
A key reason for this is the fact that ring tone providers and aggregators are beginning to try to own more of the value chain and participate in more of the revenues. Compared to polyphonic Ring Tones, the rights fees for such companies are much higher for incressingly dominant True Tone format. Which is why you see the likes of Crazy Frog, Nessy etc dominating their ring tone charts. These companies own the content and thus do not have to pay hefty fees to labels. The worst case scenario is that the labels may have inadvertently killed off the Ring Tone as a music format, condemning it instead to novelty animated characters etc.
But of course music is where the Ring Tone’s heritage lies, which is why a further example of the above trend is aggregators creating their own music content, for the same rationale of higher margins. Enter German ring tone provider Jamba who have launched a record label called JamStar Records. Of course the challenge for such labels is attracting high enough calibre artists i.e. those that are happy with having their aspirations primarily limited to being edited down into 30 second ring tones. JamStar tries to deepen the appeal by integrating the label and artist rosta into its own as yet small social network.
Should the labels be worried about the competition? No, at least not yet. But they should be worried about the trend of ring tones away from their content. It may well take a sea change in approach to licensing to reverse the trend and to reinvigorate the Ring Tone market.