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SUMMARY
It is a time change for the ringtone industry. The replacement of polyphonic
ringtones with real music ringtones amounts to far more than a format
replacement cycle: because record labels have now arrived in the market, the
very structure and operation of the ringtone industry is seeing dramatic
change.
Presented in two separate volumes, this report is focussed on identifying and
analysing the key forces that will shape the new ringtone industry and define
the winners and losers.
Volume 1: Executive Profiles
This report contains a collection of extended interviews with decision-makers
at thirteen different companies who are centrally involved in the ringtone
business at different parts of the value chain. Each of the thirteen executive
profiles is presented as a verbatim, Q&A transcript of an in-depth
interview.In order to provide a complete picture, this volume contains
detailed contributions from mobile operators, major and indie record labels,
music publishers, disruptive start-ups, venture capitalists, DRM vendors,
mobile content companies and entertainment lawyers -- all of whom have been
questioned in depth on their experience in the ringtone business.The profiles
presented in Volume 1 not only provide a highly valuable source of information
which reveals the latest thinking that is shaping the development of the
ringtone market, but they offer deep insight into developments in the wider
mobile content and mobile music arena with some fascinating perspectives
having been provided by several executives.
Volume 2: Industry Analysis
Two key themes to emerge from Volume 1 are strong, often divergent views and
conflicting commercial interests. In addition, industry incumbents are being
placed under unwelcome pressure as the value chain re-organises itself to
accommodate the record labels, who are currently pairing off with mobile
operators in a de-facto content-distribution alliance. In this report, Volume
2, these themes and others are analysed objectively to understand what the
future holds for different business models and different companies. Because of
the convergence trends under way in the mobile and online music arenas, Volume
2 also contains in-depth analysis of how real music ringtones relate to
digital music: both formats will soon be appearing for sale alongside each
other on a range of retail platforms, both fixed and mobile.
Apart from providing a wealth of information and analysis of what is happening
at the coal face, this report will allow you to easily identify which market
and product strategies are aligned with the future direction of the market,
and which are not.
TABLE OF CONTENTS
- 1CONSUMER PROPOSITION
- 1.1UNDERLYING VALUE
- 1.1.1Differences between ringtones and songs
- 1.1.2Personalisation
- 1.2PRICING
- 1.2.1Trend 1: Erosion of the premium for mobile-based song downloads
- 1.2.2Trend 2: Increase in the mean pricing of online-based song
downloads
- 1.2.3Trend 3: Convergence of realtone and online music prices
- 2RINGTONE MARKETING
- 2.1MARKET SEGMENTATION
- 2.2SAME-CATEGORY SEGMENTATION
- 2.2.1Same-brand segmentation
- 2.2.2Generalisation to Realtones
- 2.3MUSIC MARKETING
- 2.3.1Buy-in from label marketing and promotion (M&P)
- Mindset
- Lack of infrastructure
- Unfamiliarity with format
- 2.3.2Shift from mobile-focussed to music-focussed marketing
- 2.4RINGTONE MARKETING IN THE FUTURE
- 2.4.1Role of record labels
- 2.4.2Competitive advantage
- Economies of scale
- Economies of scope
- Control of product
- 3INDUSTRY STRUCTURE AND VALUE CHAIN
- 3.1CONVERGENCE
- 3.1.1Devices
- 3.1.2Channels
- 3.1.3Markets
- 3.2RECORD LABELS
- 3.2.1Definitely not business as usual...
- 3.2.2And then a pleasant surprise: realtones
- Content ownership
- Preferential access to prime retail channels
- Leverage of existing assets
- Marketing
- 3.2.3Actions being taken by labels to assert themselves in the value
chain
- Tactic 1
- Tactic 2
- Tactic 3
- Tactic 4
- Tactic 5
- Tactic 6
- Tactic 7
- Tactic 8
- Tactic 9
- 3.3MUSIC PUBLISHERS
- 3.3.1Publishing royalty rates
- 3.3.2Unauthorised combined licenses
- 3.4MOBILE CONTENT COMPANIES
- 3.4.1Trend 1: Market consolidation
- 3.4.2Trend 2: Market fragmentation
- 3.4.3Mobile content aggregators
- 3.4.4Mobile solutions providers (MSPs)
- 3.4.5Mobile content brands
- Is a mobile content brand mainly about retailing or content?
- Analysis: royalty-free content
- 3.5MOBILE OPERATORS
- 3.5.1Off-carrier distribution
- Cost
- Portal placement
- Portal search
- Direct relationships between music sites and fans
- 3.5.2Avoidance of carrier payment mechanisms
- Example: Apple's iTunes Music Store
- Carrier blockage
- The mobile content distribution oligopoly: real or imagined, fair or
unfair?
- 4COVERTONES
- 4.1CONFLICTING INTERESTS
- 4.1.1Interest group 1: mobile content companies
- 4.1.2Interest group 2: record labels
- 4.2USE OF COVERS IN THE MUSIC INDUSTRY
- 4.2.1Original recordings
- Covers
- Re-mixes and sampling
- Other industries
- 4.2.2New recordings
- 4.3COVER VERSION RINGTONES (COVERTONES)
- 4.3.1Production process
- 4.3.2Quality and economic viability
- 4.4LEGAL POSITION: COVERTONES
- 4.4.1Copyright
- 4.4.2Passing-off
- 4.5ANALYSIS
- 5CREATE-YOUR-OWN RINGTONES
- 5.1UNAUTHORISED SERVICES
- 5.1.1Service operation
- 5.1.2Example services
- 5.1.3Threats
- Mobile operator lock-out
- DRM
- Unique content
- Authorised services
- Price erosion
- MGM-Grokster -- U.S. Supreme Court Hearing
- 5.2SELF-CREATION
- 5.3AUTHORISED SERVICES
- 5.4ANALYSIS
- 5.4.1Market size
- 5.4.2Off-carrier distribution
- Cost
- Market reach
- 6FROM REALTONES TO DIGITAL SONGS?
- 6.1EZ CHAKU-UTA FULL
- 6.1.1History
- 6.1.2Service description
- 6.1.3Consumer response
- 6.1.4Key success factors
- 6.2MOBILE INTERNET: DOCOMO I-MODE AND VODAFONE LIVE!
- 6.2.1Product quality
- Vision
- Engineering-led
- Market-focussed
- 6.2.2Market timing
- 6.2.3Summary
- 6.3IMPLICATIONS FOR MOBILE OPERATORS OUTSIDE JAPAN
List of Figures
- 1Differing Views: Technologists and Marketers
- 2Comparison of Value: Ringtones and Full-length Songs
- 3Developmental Drivers During Main Life Stages and Correlation With Value
Offered by Ringtones and Recorded Music
- 4Comparative Analysis of Personalisation Attributes Offered by Ringtones
Compared With Other Means of Personalisation
- 5Future Trends in Retail Pricing: Mobile Music, Online Music and Ringtones
- 6On-going Price Reductions in Realtones: UK, T-Mobile
- 7Example of Segmentation Within a Category
- 8Segmentation Within a Brand: Example 1
- 9Segmentation Within a Brand: Example 2
- 10Hierarchical Segmentation: Categories, Brands and Derivatives
- 11Differing Marketing Objectives: Record Labels and Music Retailers
- 12The Changing Nature of Ringtone Marketing
- 13Integration of Ringtones Into Album Release Process
- 14Example of Realtones Being Used by Record Label (Warner Music)
- 15The Music Marketing Process
- 16Realtone Marketing: Multi-format and Multi-channel Opportunities
Available to Record Labels
- 17Ringtone Retailing Converging with Recorded Music
- 18Ringtone Categories
- 19The Way it Used to Be: Ringtone Industry Structure and Value Chain
- 20The Way it is Now : Ringtone Industry Structure and Value Chain
- 21Service and Device Convergence: Implication for Operator Music Strategies
- 22Three Types of Mobile Content Company
- 23Mobile Service Providers: Various Business Models
- 24Strategic Options: Mobile Content Aggregators and Record Labels
- 25Differing Views on Mobile Content Brands
- 26Mobile Retail Strategy: Various On and Off-carrier Options Available to
Merchants
- 27Examples of Use of Original Recordings and Cover Versions: TV
Advertisements
- 28Examples of Advertisements for Original Realtones
- 29Examples of Advertisements for Covertones
- 30General Model: Creation and Transfer of Musical Rights
- 31Covertones: Forces of Growth and Inhibition
- 32Operation of Create-your-own Ringtone Services
- 33Unauthorised Ringtone Creation Service: Example 1
- 34Unauthorised Ringtone Creation Service: Example 2
- 35Comparison in User Benefits: Ringtone Creation Services and Existing
Software Tools
- 36Use of a Simple Sound Editor to Create a Ringtone
- 37Examples of Audio File Format Conversion Applications
- 38Ringtone-Creation Service: Bleep.com
- 39Authorised Ringtone Creation Services:Reasons for Adoption by Different
Players in the Value Chain
- 40Ringtone Segmentation Framework
- 41Off-Carrier Mobile Content Delivery Solution
- 42Typical Song Download Times: KDDI
- 43KDDI's Launch Range of CDMA 1X WIN Handsets Compatible with EZ Chaku-uta
Full (November 2004)
- 44Timeline Showing Introduction of Mobile Internet, 3G Services and
Chaku-uta in Japan
- 45Cumulative Downloads Since Launch: Chaku-uta, Chaka-uta Full and iTunes
Music Store
- 46Cumulative Service Revenues Since Launch: Chaku-uta and iTunes Music
Store
- 47Cumulative Downloads and Addressable Market: Chaku-uta and iTunes Music
Store
- 48Growth in Service Penetration: Chaku-uta and iTunes Music Store
- 49Historical Development and Current Dominance of the Mobile Internet in
Japan
- 50Development of Fixed and Mobile Broadband Access: Japan
- 51Penetration of Cellular Mobile Telephony: Japan, U.S., UK, France and
GermanyComparison of Two Mobile Internet Offerings: i-mode and Vodafone live!
- 52Root Cause Analysis Identifying Reasons for i-mode Success
- 53Relative Penetration of Fixed and Mobile Internet -- Japan 1997 to 2003
- 54Comparison of Relative Success of i-mode and Vodafone live!
- 55Relative Consumer Perception of Internet and Digital Music: Japan, UK
and U.S.
- 56Examples of Leading Music Phones
- 57Not Just Song Downloads Over Mobile: Eight Different Mobile Music
Scenarios
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