Ringtones reborn: Just call them notifications now

Remember Crazy Frog? The bike-riding amphibian and his irritating, ubiquitous song symbolized the premium ringtone market a few years ago, before — thankfully — fading into obscurity as smartphones and apps helped crush the popularity of expensive over-the-air mobile tunes.

But while the frog may look more like a dinosaur these days, one Israeli startup thinks it has found a way to evolve the idea for the modern mobile user — and believes that if it succeeds, it will become bigger than premium ringtones ever were.

Pops, an Android development firm out of Tel Aviv, thinks that personalized notifications are the next big mobile money spinner, and is backing that up with the formal announcement today that it has raised $1.5 million from Mangrove Capital Partners, best known for being an early investor in Skype.

Essentially Pops is a wrapper for notifications, which allows users to turn their ordinary alerts into something flashier and more entertaining. The free-to-download app hosts a gallery of more than 1,000 animations (called pops) that hook into the notification systems for apps like Facebook, SMS and Gmail, letting users to spice up their Android (s: GOOG) handset and see different clips or video depending on what sort of message is coming in.

For example, instead of a small on-screen message informing you that there’s a new Facebook message, you can have a Nyancat pop that dances on-screen. Or instead of a simple email alert, you could have a shiny metal Transformers-style announcement. Users can create their own pops from videos on their mobiles, too.

Pops CEO and co-founder Yaron Orenstein, who cut his teeth in the browser toolbar business, said he came to the idea when he saw how popular notifications and alerts were with users — and how broad the opportunity for personalization was.

“We personalize the pictures at the top of our Facebook timelines, our Twitter backgrounds, our ringtones, we put stickers on our laptops, we personalize everything. What could we do to take it a step further?”

The average smartphone owner sees 3,000 notifications each month, he says: “I had to do something with that.”

He sees notifications — many of which could be premium content — as a vast untapped market, and so far at least it’s looking pretty good. Since launching on the Android market last November, Pops already claims to have reached 500,000 users, and Orenstein says the average Pops user sees around 15 individual pops each day — with some being exposed to as many as 80 or 90.

“You make, what, 10 or 15 phone calls in a day,” he says. “You probably see many more notifications. It’s an order of magnitude bigger than ringtones.”

While the idea of customizing your phone this way might seem garish to some, there’s no doubt in my mind that it has got the potential to be a big hit.

After all, customization was what drove premium ringtones to explode in the mid noughties, creating a market that was worth an estimated $4.5 billion in 2006. It’s been on the decline ever since then, but ringtones are still a big money spinner — bringing in more cash for record labels than digital services like Spotify and Pandora, for example.

Nowadays apps are the big noise, but it’s easy to imagine media companies jumping on a bandwagon that allows them to score extra revenue in this way. The numbers that Pops is posting are the sort of thing that could easily entice brands to start using its system to provide premium downloads that promote their own properties.

Still, Pops has its weaknesses. Right now it’s Android-only, and looks set to remain that way, with the company waiting to see if Windows Phone (s:MSFT) is a valuable platform and Apple’s (s:AAPL) restrictions on iOS apps making it impossible to replicate for the iPhone. At the same time, there is a lot of effort required to provide a consistent service across the fragmented Android ecosystem: it’s tough to produce a service that is easy to use while taking into account the variable flavors of Android devices use, their screen size and their resolution.

And like premium ringtones, which declined just as smartphones took off, premium notifications could suddenly see themselves undermined by a shift in the market.

But although there are many potential obstacles, Orenstein is bullish about Pops’ prospects — and plans to use the funds to grow his team and expand the company’s partnerships to create what he believes can be an entirely new category of content.

“Right now this is a new ecosystem that we’ve invented, so we have a lot of challenges — but you also have a lot of room for innovation.”