Ringtones left out of digital music price wars
LONDON, England (Reuters) -- A recent price war has made Internet song downloads cheaper while the price tag on a mobile phone ringtone has barely budged, and in some cases, is creeping up, a new report on Tuesday said.
The price discrepancy between downloads and ringtones -- those ubiquitous tuneful greetings programmed into millions of handsets -- can be laid squarely at the feet of record companies, according to London-based consultancy Informa Plc.
The main culprit is the advent of so-called "sample" ringtones, the latest stereophonic tones pulled from actual studio recordings.
They carry a
price tag of as much as four times higher than the typical Internet download
Record labels are demanding mobile operators and other ringtone resellers pay a royalty rate equivalent to between 25 percent and 55 percent of the total retail price for a "sample" ringtone, Informa said.
"The reseller is really between a rock and a hard place," said Simon Dyson, a co-author of the report. "They are torn between raising the price or keeping it steady in the hopes of establishing a market."
"Demanding such high percentage rates by the record companies could certainly lead to the market being depressed."
Ringtone sales have become a surprisingly strong side business for the music industry, one that is expected to grow to over $5.0 billion in 2007 from $3.0 billion in 2003, Informa predicted.
But the problem for the piracy-battered music labels is that licensing restrictions have kept music labels out of the sector's early growth. With "sample" ringtones, the labels hope to cash in on the business.
The "sample" tone's predecessors -- the monophonic and polyphonic tones -- are crude renditions of a sound recording. Royalty payments could be collected by artists and music publishers, usually at a rate of roughly 10 percent, but the labels were sidelined from the collection process.
But "sample" ringtones, because they are often taken from studio renditions, can now be licensed by the labels too.
As a result,
prices for "sample" ringtones across
song downloads tend to follow Apple Computer Inc. iTunes
straightforward pricing model of 99 cents per track. In
Meanwhile, the increased competition in the download market has seen
download services such as