US ringtone sales down: Novelty wearing off? Nah!

Broadcast Music (BMI) projects that U.S. ringtone sales will dip to $550m in retail sales in 2007, down US$50 million from calendar year 2006.

Here's why according to BMI: "We believe that the ringtone market's growth has leveled off and the novelty phase has ended." You can read more of it here

I do not think this explanation is accurate. I suspect that it is not novelty wearing off but the kids and technology smartening up: 1) phones and computers often come equipped with Bluetooth now, 2) new phones usually are MP3-capable. The kids have figured out how to transfer their favourite tunes to their phones via Bluetooth.

This might result in sub-optimal loops being cut (i.e. the tones not rolling as nicely as a ringtone as a professionally-made one might) but on $1.99 saving per tone (when the full track costs you a mere $0.99 on iTunes), that is a no-brainer. Also: with programmes like Garage band et al, every kid can cut loops into MP3s, too.

This last bit is perhaps the one that killed it off: if a product is unique in that it is defensible against similar products on other media, pricing is not under direct pressure as it is not directly comparable (e.g. monophonic ringtones and recorded music). If it becomes comparable (e.g. MP3's on mobile phones vs. iTunes), there has to be something special justifying a higher price-point. The higher the difference in pricing, the better that USP has to be. 20-second loop cut by a pro? Not good enough...

Conclusion? Bad piece of pricing policy and marketing, I would suggest. Elementary, isn't it? You've screwed up your own market, folks...


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