(by Dana Blankenhorn): (A report from MobileMusiCon, the mobile music conferece held at CTIA on Wednesday) David Munn’s audience (see below) applauded his speech, but it was clear during the MobileMusiCon ringtone panel, called “global blingbling,” that big obstacles lie in the path of Munn’s money gusher.
To start, there are the carriers. Only this week have any embraced Premium SMS messaging, and Verizon, the largest, not only has refused to accept third-party billing but won’t allow any content over its network that it can’t control, that it can’t vet, and that it can’t grab most of the profit from.
Yet consumers don’t know this. The point isn’t advertised by Verizon’s rivals. Verizon’s proprietary network loses no customers because customers don’t even know what they’re missing.
Then there’s a complete lack of merchandising. Both company-owned and re-sale stores are interested only in selling contracts. They can’t help you choose a phone, they won’t teach you how to use it, they don’t tell you about what products each phone can buy. It’s amazing that the $100 million U.S. ringtone market exists at all, not that it’s so small. Few U.S. phones are addressable, noted Modtones president Carolynne Scholeder.
The U.S. has four major carriers, each with a different set of network standards, so advertising ringtones is useless, said Brad Zutat of Xingtone. “You can’t advertise on TV because the phone is either Cingular or Verizon-centric,” thus half an ad buy is wasted on customers who can’t buy what you’re selling.
There’s also a lack of a subscription model for ringtones, Scholeder said, which is driving Asian revenues. “We need more price flexibility.”
But they’re not likely to get it. Publishers like EMI expect to get more from their “ringtunes” because they own mechanical (reproduction) rights, which don’t have to be paid on polyphonic ringtones. (A polyphonic ringtone is a midi file, a ringtune an mp3.) Carriers still want to control their distribution, and their “decks” make purchases hard. “There is no business model. The only thing you have is a carrier deck; there’s no premium SMS,” said Fabrice Sergent, CEO of Lagardere Active.
U.S. demand for ringtones may be there, the panel concluded, and phones that can get good ones are coming to the market. But unless the channel and merchandising problems are solved, Munn’s dreams may well turn into nightmares.
Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the “Interactive Age Daily” for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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