Record labels eye-up ringtone services

Record companies may be about to start buying up mobile phone ringtone providers and are likely to go one step further by setting up ringtone studios.

In a report, research company Strategy Analytics forecasts that sales of personalisation data services for mobile phones will rise from $3bn this year to $6bn in 2008. It also said that although the sales will come from services such as mobile phone graphics, icons, screen savers and novelty voicemail, it is ringtones that will dominate.

Compelling evidence to support this claim is already surfacing, with the Japanese Society for the Rights of Authors, Composers and Publishers reporting a doubling of ringtone sales in 2002 over the previous year, with an average of 110 million ringtones being downloaded each month.

What's more, the company's report Real Music Ringtones: Changing Dynamics in the $4bn Ringtone Market, predicts that record companies will consider acquiring ringtone producers and distributors to cash in on the burgeoning sector, although it's also anticipated that the big labels will continue to license their music to independent ringtone producers.

According to Strategy Analytics senior analyst Nitesh Patel, just how directly involved in the sector record companies will become remains somewhat unclear. But what is clear is that over the coming months and years, consumers will begin to demand "real" music ringtones, as opposed to the current simple tones or even the more advanced polyphonic ringtones.

As this demand grows, new ringtones will have to be created using master samples from the big record labels, allowing the record companies to take a more aggressive stance in the sector. Strategy Analytics said that in this environment, existing ringtone solution providers will be forced to offer greater value to mobile operators who and record companies if they are to withstand these pressures.

"We see ringtones as a catalyst for record companies to become more actively involved in the ringtone market, in light of dwindling CD singles sales, as is often reported, and we advise that this would be a key strategy for them moving forward," Patel said.