Growth in ringback tones energizes mobile market

By Antony Bruno

DENVER (Billboard) - As the cash cow that was the ringtones market slowly heads to pasture, the music industry is turning to a new mobile stud -- ringback tones.

Ringbacks -- the music you hear when you call someone -- represent the only area of significant growth for mobile music-related applications in the last year. The number of mobile subscribers who reported purchasing a ringback tone increased 69% from February 2007 to February 2008, according to data from M:Metrics. By comparison, neither ringtones nor wallpaper images could keep pace with the overall market growth, increasing by only 4.3% and 6.2%, respectively, in the same time frame.

"The growth of ringbacks is among the fastest trajectory for growth of any services we're tracking," M:Metrics analyst Mark Donovan says.

For a music industry that has long relied on ringtones to pad its digital revenue pie, this has several implications, both financial and promotional.

According to figures from BMI, U.S. ringtone revenue fell slightly more than 8%, or $50 million, in 2007, and is expected to fall another $40 million, or 7%, this year to $510 million -- a sharp decline from the peak of $600 million in 2006. Yet ringback tones are more than compensating for the decline. Ringback sales are expected to increase 50%, or $70 million, to reach $210 million this year.

And while total ringtone revenue is almost twice as large as that from ringbacks, research group IDC says global ringback revenue will outpace that of ringtones by 2010.

"Ringback tone revenues are now a steady, reliable stream," RCA Records director of mobile marketing Sean Rosenberg says. The label is the first to boast of gold-level ringback sales with the single "No One" by Alicia Keys, which surpassed 500,000 in sales in the United States alone.

While declining to provide specific data, record labels and analysts interviewed for this story point to Verizon Wireless as the leading operator driving the ringback tone market. Part of its success is credited to a more robust mobile music marketing effort compared with other operators -- but Verizon also stands out as the only operator that can bundle ringbacks with ringtone sales.