Ringtones were once popularly used as an identity statement, with users willing to pay as much as $3 for a few seconds of their personal anthem to signal an incoming call. However, it seems that consumers are no longer purchasing ringtones with the same enthusiasm as in years past. According to research from SNL Kagan, ringtone sales are on the decline–falling from $714 million in 2007 to just $541 million in 2008. As a result of this drop, overall U.S. mobile music revenues posted their first-ever annual decline.
So why the change in behavior? It could be another sign of the tough economic times, but many insiders believe that users are getting more savvy about creating their own ringtones. As technology continues to evolve and present new options, consumers are evolving right along with it and learning to adapt to changing patterns. Sites like makeownringtone.com and create-ringtone.com allow consumers to use their own files to create custom ringtones. What would have seemed too complicated and clunky for the common folks even one year ago, is now viewed as just another click or download thanks to these user-friendly sites.
What will happen next to make up for the loss of ringtone sales? It seems that the wheels are already in motion to take the next step. As shown in our own research, music usage via cell phone is currently low, but as digital opportunities continue to roll out it seems apparent that carrier companies are putting in more effort to encourage mobile music usage and purchase behavior. Handsets are continuously getting more advanced with better features to accommodate music, texting and web browsing. In addition, the increasing popularity of smartphones is driving the development of more and more music applications.
With consumers’ increasing reliance on cell phones as their all-in-one device for communication, web browsing and even news alerts, mobile carriers have no choice but to work on bringing music out from off the back burner, especially if they are looking to bolster music usage sales. Apple got out in front with the iPhone and continues to step up with available ringtones for its users. While Apple’s ringtones are still not cheap at $1.29, they are at least much less than the earlier $3 versions that used to be the norm.
Certainly, we will see a continued focus on more music applications in the near term. Although ringtones aren’t bought and paid for as much as they were, they do still exist and provide some kind of revenue–at least for now. The key for the carriers and the music labels will be to provide value beyond the ring tone to drive sales and adoption.