Xellular Identity - All About Mobile Content & Marketing

Ringback Tones Promotions

Hi all,

Xmas is right around the corner with its creative ringback tone mass media campaigns... But before that, I didn't want to leave without acknowledgment a few RBT campaigns from the last two months.

First campaign is brought to you from Colombia. The Colombian mobile operator Tigo has partnered Sony BMG to promote its content in a leaflet inside CDs and DVDs. Now Colombian CD\DVD buyers can simply send the short code that appears on the leaflet via SMS and get their own Backtone (Tigo's service name for ringback tones). The most crucial factor in this campaign is the offered playlist -- it would be very clever to offer music of the same type as the bought CD\DVD.

The second campaign is brought to you from the US. American mobile operator Cingular the mew AT&T launched a huge "Win a trip for 2 to meet Fall Out Boy, 50 Cents or Taylor Swift" campaign. AT&T users are encouraged to "Find Your Tone-ality to Fit Your Personality" and download an Answer Tone (AT&T's service name for ringback tones) and apply. Then, "if the artist calls you and hears his or her own song, you've won!"

And I can't wait to see this year's ringback tones Xmas campaigns... now that's a treat :)

Pricing: THE "Make or Break" Factor

We've been asked many times - what is the right price for ringback tones? Should it be related to the price of ringtones? What parameters should be taken into consideration while determining the price? Those are great questions that I'll try to answer here, based on the experience and data that has been gathered from many operators worldwide.

In general, the ringback tones pricing model is based on a combination of these revenue streams:

• Content fee - the price that is paid for each selected tune.
• Monthly/daily fee - the price that is paid for operating/enabling the ringback tones service.
• Registration fee - a one time fee that is paid upon joining the service.
• Content expiration - some operators have a tune expiration date, which means that after X days the activated tune expires. If the subscriber won't buy a new tune after the old tune expires, the default "ring ring" will be assigned to his/her account. Usually operators notify the subscriber that his/her selected ringback tone is about to expire and will offer a new tune (for a full/reduced price).

These four streams join up to 3 common pricing models:

1) Content fee + Monthly/daily fee:
An AT&T user (for example) is charged $1.99 per tune + additional $0.99 of monthly fee for the Answer Tones service. The monthly fee is charged regardless of the number of Answer Tones ordered.

The benefits of this model are the constant revenue stream & quick return of investment (ROI) coming from the monthly fee. However, setting the right monthly fee is crucial; overcharging will lead to high churn rates.

2) Content fee + Content expiration:
An AMC user (for example) is charged 120 lekë ($1.41 USD) for content fee and the Fun Tune expires after 6 months.

The benefit of this model is the lower user resistance due to the lower (perceived) price for ringback tones. Content expiration increases awareness of the service (subscribers don't hear their own tune and many times they actually forget that they are subscribed to the service) and aims to generate more usage. When the tune expires, users are offered to purchase a new tune. At this point users are actually reminded that they have been subscribed to the ringback tones service which leads to 2 scenarios: a) users choose to opt-in and buy a new tune (i.e. pay the content fee) or b) users are reminded that they have been subscribed to a service that they no longer want and they opt-out. Unfortunately, many users choose to opt out, causing higher service churn rates.

Operators that use this pricing model are strongly recommended to have a good renewal system which offers the user a new tune upon the expiration date and provide an easy and intuitive purchasing experience (usually via SMS with deep linking). The importance of the renewal system is greater as the tune's "shelf life" is shorter. Also, it should be based on intuitive call for action.

3) Content fee + Registration fee:
A Kyivstar user (for example) is charged 7,30 UAH ($1.45 USD) upon joining the D-Jingle service (one time payment for activating the service) + additional 7,30 UAH ($1.45 USD) for each tune. All tunes expire after 3 months.

This model is less popular among operators as it generates lower revenue stream for the operator. Also, at the first purchase, subscriber is charged for two payments (content fee and registration fee) at once, making the perceived price relatively high.

To summarize, each of these models has it advantages and disadvantages but there is no correlation between the pricing model & the ringback tones service take-up; however, there is correlation between price & service take-up, the price is THE "make or break" factor, as you can see in the following diagram:

Effective Pricing - Guidelines:

While there is no single winning recipe for ringback tones pricing, we do have some recommendations and guidelines for effective pricing. First and most important, the ringback tones price should be:

• Affordable - based on subscribers' capabilities
• Perceived as fair - compared with other operators & services

How can you make sure the price is affordable and perceived as fair?

Factor	Recommendation
Competitors	Lower or equal to competitors' price
Ringtones	<monthly fee + content fee> should be 30% below or above ringtones price
Monthly ARPU	<monthly fee + content fee> should be lower than 20% of ARPU
Average Prepaid card	Users should be able to pay monthly fee & purchase ringback tones along with their other voice & data expenses

And one last tip: if you don't have it already - create and promote a "promotion" category with a lower price. The promotion items can include the new single the music label is currently promoting, music covers, a discount for the first purchase etc'.

Coming Soon: Multimadia Ringback Tones

Real announced at the CTIA conference it will supply wireless operators with multimedia ringback tones. The Multimedia ringback tone takes the very popular musical ringback tone service to a whole different dimension, from the audio space to the visual video clip arena. It allows you to set a video clip to entertain your callers while waiting you answer their call.

"Building upon Real’s pioneering success in Ringback Tones (RBTs), Real is making Multimedia Ringback (MRB) Services available to mobile operators around the world.  This new 3G mobile service—first launched with Korea’s SK Telecom earlier this year—ushers in a new level of personalization in RBTs, allowing subscribers to incorporate audio, images and video to deliver a unique, customized experience to callers before they are connected."

[via press release]

Related stories: A Jump Into the Future - Multimedia Ringback Tones

The Fun Dial Marketing Seminar - First Coverage

Back in 2002 was the first introduction of customized ringback tones, made by the South Korean operator SK Telecom with its 'Color Ring' ringback tones service. SK Telecom generated over €80 million (US$100 million) in Q2 2002 and has reached 54% of SK Telecom's 18 million subscribers in penetration.

Despite of the cold welcoming of operators in Europe and America, today Ringback Tones is becoming one of the biggest mobile entertainment revenue generators. In some operators Ringback tones are overtaking ringtones sales. In Europe and North America there’s a 60%-80% of Ringback Tone potential end-user-coverage, at least one operator in each Western European country and almost all in North America has already launched the service. Also analysts forecast a substantial ringback tones market growth in the upcoming years.

 

At present, most of the operators are facing various challenges in the way to increase Ringback Tones service penetration, create on going usage of content, increase the awareness and in general turn Ringback tones into a more successful service. Understanding operators' needs and challenges Comverse Fun Dial (Comverse’s Ringback Tone brand) team came up with the idea to hold the second ever marketing seminar focusing the European market. The Fun Dial Seminar brought together leading industry experts, mobile operators, (some that have already launched the service and some which are on the process of launching), as well as content providers, music labels and managed services providers to facilitate an environment of knowledge sharing and to create an open forum to discuss burning issues related to Ringback Tones.

For those of you who weren't able to attent the Seminar, I will cover here some of the study cases presented at the Seminar:

• How to turn the Ringback Tone into a successful service generating significant revenue?
•Case studies of successful Ringback Tone marketing strategies led by mobile operators
• Opening the ringback tones service to 3rd party content providers.

You're welcome to tune in every Tuesday for a part of this series!

Back in 2002 was the first introduction of customized ringback tones, made by the South Korean operator SK Telecom with its 'Color Ring' ringback tones service. SK Telecom generated over €80 million (US$100 million) in Q2 2002 and has reached 54% of SK Telecom's 18 million subscribers in penetration.

Despite of the cold welcoming of operators in Europe and America, today Ringback Tones is becoming one of the biggest mobile entertainment revenue generators. In some operators Ringback tones are overtaking ringtones sales. In Europe and North America there’s a 60%-80% of Ringback Tone potential end-user-coverage, at least one operator in each Western European country and almost all in North America has already launched the service. Also analysts forecast a substantial ringback tones market growth in the upcoming years.

 

At present, most of the operators are facing various challenges in the way to increase Ringback Tones service penetration, create on going usage of content, increase the awareness and in general turn Ringback tones into a more successful service. Understanding operators' needs and challenges Comverse Fun Dial (Comverse’s Ringback Tone brand) team came up with the idea to hold the second ever marketing seminar focusing the European market. The Fun Dial Seminar brought together leading industry experts, mobile operators, (some that have already launched the service and some which are on the process of launching), as well as content providers, music labels and managed services providers to facilitate an environment of knowledge sharing and to create an open forum to discuss burning issues related to Ringback Tones.

For those of you who weren't able to attent the Seminar, I will cover here some of the study cases presented at the Seminar:

• How to turn the Ringback Tone into a successful service generating significant revenue?
•Case studies of successful Ringback Tone marketing strategies led by mobile operators
• Opening the ringback tones service to 3rd party content providers.

You're welcome to tune in every Tuesday for a part of this series!

Reminder: The Webinar is Today

Just a quick post to remind you that our webinar is happenning today. If you'd like to join - you're only one click away.

Enjoy!

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Learn how can operators gain significant revenues from ringback tones by leaving the marketing to third party experts to promote the concept of RBTs successfully.

• Ringback Tones - The Next Wave
  Mr. Meidad Sharon, Director of Product Marketing, Fun Dial^TM Comverse
• The First Ever Off-deck Ringback Tones Case Study in the Western Hemisphere
  Mr. Andrew Rippon, Vice President Sales Central Europe, Jamba
• Q&A

one of the leading global mobile entertainment D2C companies, is the first off-deck player in the western world to carry out a mass-communication campaign promoting its ringback tones in 2 operators in Germany, generating substantial revenues for both mobile operators and Jamba.

Comverse Fun Broker takes the ringback tone service out of the “walled garden” by enabling ringback tones to be sold off-deck by third-party players, using the successful model used for ringtones. By that, Fun Broker enables operators and content providers to exploit the huge off-deck potential.

Come and have a taste of the next BIG THING for ringback tones!
September 20, 2007 at 15:30 GMT; 11:30 EST; 17:30 Israel time;

You're Invited to a Webinar

Hi all,

As you know, at my day job I work in Product Marketing at Comverse. I wanted to share something I've been working on lately:

Next week we're having a webinar which will cover the off-portal new market for ringback tones. (You're probably raising an eyebrow and wondering what am I talking about...) Here is a short overview and some background information:

As you know, a ringtone is a music file that is installed on your mobile device. After downloading the file (from your operator's portal or from other providers) the file is yours to keep. A personalized ringback tone is a tune heard while your callers call you which replaces the default "ring ring" tune. as opposed to the ringtone, your ringback tone is at the operator's system. This is why the operator has been the only player who could offer this service.

The upcoming webinar will present the first case study of two German mobile operators who have opened their system to a content provider who has been successfully promoting their ringback tones services.

Attached is the invitation to the fun dial webinar, feel free to join! :)

--------------------------------------------------------------------------

Learn how can operators gain significant revenues from ringback tones by leaving the marketing to third party experts to promote the concept of RBTs successfully.

• Ringback Tones - The Next Wave
  Mr. Meidad Sharon, Director of Product Marketing, Fun Dial^TM Comverse
• The First Ever Off-deck Ringback Tones Case Study in the Western Hemisphere
  Mr. Andrew Rippon, Vice President Sales Central Europe, Jamba
• Q&A

one of the leading global mobile entertainment D2C companies, is the first off-deck player in the western world to carry out a mass-communication campaign promoting its ringback tones in 2 operators in Germany, generating substantial revenues for both mobile operators and Jamba.

Comverse Fun Broker takes the ringback tone service out of the “walled garden” by enabling ringback tones to be sold off-deck by third-party players, using the successful model used for ringtones. By that, Fun Broker enables operators and content providers to exploit the huge off-deck potential.

Come and have a taste of the next BIG THING for ringback tones!
September 20, 2007 at 15:30 GMT; 11:30 EST; 17:30 Israel time;

Usability Rules!

The common goal of all usability professionals, no matter if they specialize in cooking utensils, clothing or developing mobile applications and services, is to develop products from the end-user needs’ perspective, so they could use them easily and intuitively. Developing products should not be based only on technical possibilities and/or limitations. why? Simply, when it's easy to use, more people will use it and the more revenues the product\service generates. Unfortunately, many products fall at the "technical trap" and leave behind the goal of intuitive usage.

That is why I was very impressed with Hutch (India) “Copy Callertune” feature:

So simple. So elegant. So intuitive. All you need to do is press the * key when the ringback tone is playing. Who wouldn't press * if he\she hears a cool Callertune?

At Hutch’s website I’ve found the following directions:

“How to copy Callertunes Like your friend’s Callertune? Now you can set it on your own Hutch phone - it’s easy! Just call your friend, and while the Callertune is playing, simply press the * key on your Hutch phone. That’s it - the Callertune will automatically be copied and set on your Hutch phone.”

Way to go! And if you come across more cool examples - don't be shy and send me a word about it. Thanks :)

Your Help Is Needed

Hi,

I'm back from a short vacation (I moved to a new apartment) and found this ringback tones commercial of Hutch in my inbox. The problem is that I don't know Hindi... so if any of my dear readers can help with the translation, it will be very much appreciated. Thanks :)

Ringback Tones - some figures

"Personalization is what is really driving the mobile phone market right now," said Laura Merritt, spokeswoman for Verizon Wireless. "The cell phone has become an extension of people's personalities with ringtones, ringback tones and other customizable options."

"Verizon wouldn't give exact figures on how much money the company makes off of extras like ringtones. However, in the first quarter of this year alone, Verizon customers downloaded 106 million ringtones, ringbacks, songs, games and applications, Merritt said. Each one of these customizations costs anywhere from $1 to $10."Ringtones and ringback tones are certainly among our more popular offerings," Merritt said."

[via The news Herald]

Frank Dickson of iSuppli: Strong Long Term Growth Lies in the Mobile Full-Track-Downloads

Hi all,

Welcome to the second part of the mobile content coverage.

Today, Frank Dickson from iSuppli will be visiting here. Frank is Principal Analyst, Multimedia Content Services. He covers markets for digital video and home entertainment, with focus areas including IPTV, video on demand, home networking and broadband video.

Hi Frank. How are you today?
Life is good. Thanks for asking.

What has been successful to date and what promises to sell in the future?
In addition to premium content, messaging continues to grow strongly worldwide but with significant regional variation. The mature country markets of Western Europe and Asia saw growth, but the growth in the Americas almost astounding. Growth is strongest among the US operators, several of which saw revenue associated with messaging double in 2006 compared to 2005. Messaging growth is being driven by both increased p2p messaging usage as well as increased premium SMS associated with mobile content purchases and participative TV.

What are the key drivers for market growth for different types of mobile content and entertainment?
The future is all about video! The mobile video market continues to develop, but remains highly fragmented on nearly all fronts. Business models are uncertain. Technology standards are uncertain.  Consumer usage models are uncertain. Content rights need to be resolved. Geographic differences are significant in both content consumption and regulatory environment. As a result, the mobile video market will take time to develop, but offers the biggest potential upside. Competitors across the value chain should participate early to learn and develop a position in the market. Competitors should set expectations appropriately for a highly volatile market with high uncertainty in the short term. Agility will be key to adapt to rapid change.

Many state that widespread consumer demand has lagged after a rapid penetration rate. Why? What are the barriers for market growth of market for mobile content?
The major barrier to growth of mobile content is leakage, as in revenue leakage. Approximately, 5% to 10% of transactions turn out as bad transactions due to fraud, lack of funds on a prepaid card or delivery problems. Another 5% to 15% of good transactions result in refunds due to shady marketing practices, overly protective wireless operators not wanting a customer to have a bad content experience or a lack of transaction visibility for customer service. Wait, did I mention the customer service support call costs? There is money leaking everywhere.

One of the problems is that the wireless operators want to be in the center of the purchase experience.  The billing systems however are built to service reoccurring wireless subscription customers. Wireless operators making themselves the nexus of mobile commerce transactions creates a problem as they are now providing high volume transaction clearing services like those provided by Visa, PayPal and others.  Frankly, processing financial transactions is not at the heart of their distinctive competencies.

How will the services evolve over time?
The mobile music market is among the most dynamic content categories worldwide. Polyphonic ringtones are receding with a transition to realtones. However, on a worldwide basis, the overall ringtone category appears to be slowing. 

Ringback tones continue to gain strength in Asia, but haven't migrated significantly to other geographic regions yet. Video ringtones are among the newest services positioned as a next-generation ringtone.
The emergence of full track download music services continues, with operators worldwide deploying services. Dramatic growth of these services remains mixed regionally and by operator. Consumers are still slow to build awareness, while operators have significant challenges to put together a cohesive and easy-to-use full track music storefront. Overall, in the emerging battle between music phones and mp3/pmp players, the music store and music delivery platform still significantly favors mp3-oriented services. 

What applications will drive the market in the next few years?
We believe that there is strong long term growth in the mobile full-track-download market. However, outside of Asia, the inflection point for dramatic growth is still developing. Overall, iSuppli reduced it’s full track download forecast in this quarters tracker, while increasing our outlook for mobile music streaming services. Full track downloads will continue to be among the strongest mobile content markets, while streaming music services will segment the market somewhat and take advantage the subscription-based business model which aligns ideally with mobile operator business models.

For example, we did end-user primary research to provide more insight into consumer demand.  Approximately two-third so respondents listened to music on they PMP; however, only 10% listened on their phones. This suggests their may be some struggle converting individuals from a usage specific device mentality to unbiquitious device mentality.

A big thanks to Frank Dickson for this great interview! :)

Enriched Ringback Tones Offering With Non-Music Content

When you think of ringback tone, the first thing that probably pops into your mind is a personalized music played when you wait for the person called to answer. Last week I came across creative thinking of what can be nice to hear while waiting:

The Indian mobile operator Hutch enriched its ringback tone portfolio with a few creative non-music content categories (apart of the natural/default music category):

• One of the categories offered by Hutch is playing cricket scores for callers. Once Cricket Callertunes are enabled, it will play cricket scores on match days, and even carries a stadium jingle followed by the match details. When the day's play is over, Cricket Callertunes will automatically get disabled and the default Callertunes will be activated. On the next match day, Cricket Callertunes will automatically be re-activated and so on. [No need for me to spell it out how these so frequent updates generate $$, right? ;)]
• The second category offered by Hutch is called “Busy Callertunes”. Once it is enabled, callers will know that you are unable to take their calls. You can set an appropriate Busy Callertunes to tell when you are in a meeting, at the movies, have low battery, or on a holiday, without answering the phone (activation is made by sending SMS).

This is a great example how “thinking out of the box” can help operators build a creative and wider offering which attracts many more users to the service. And I’ll end this post with the TV commercial of the Cricket Callertunes - enjoy!

You Asked, We Answered

Today we have a an interview with Comverse Fun Dial marketing experts, Audelia Boker and Inbal Rosenberg, and Scott Manthey of JabberTones will be asking the questions!

Scott: Why have ringback tones in general been the red headed step child in the content mobile industry? I have felt that the hype in the industry after real tone/master tone debate and the never found app skipped right onto video when ringbacks were today and video is still tomorrow. Is it the carriers (b/c there is no competition= no marketing?) The content producers (figured the carriers would advertise for them?)
Audelia: For a long time, the only players that were able to market ringback tones were the operators since it's a network service. Therefore, B2C players such as content aggregators couldn't take part in the business and promote the service. This is about to change, with content mobile players stepping in.

Scott: Why haven't the enterprise sector jumped into ringback space - branding their company cell phones without spending on a pbx?
Inbal: I think it all depends on how aggressively the operator is marketing the service to this segment. We know of operators that 20% out of their ringback tones users are corporate users.
Xen: There are some mobile operators that have realized that the business is a relevant segment for ringback tones. For example, Orange IL targeted its business customers and provided a suiting offering -- to turn the ringback tone into a channel to communicate with wide audience. Many big sized companies use the corporate ringback tone as another channel of advertising (and play their advertising campaign), small and medium sized businesses, which have smaller budgets for advertising, use their company’s ringback tones to position themselves as creative, dynamic, cool and promising companies.

Scott: In terms of trends of ringback tones purchasing, is there a correlation with handsets or computer usage or any customer habits outside the mobile arena?
Audelia: Not that we know of. We are more aware of a correlation with other mobile types of usage (SMS usage, games, etc…).

Scott: I have heard that the beast selling ringback tones are movie themes - is this consistent with your data? How is the content different than the top selling ringtones? More voice tones? More music? I really care more about the content that is not being driven by a marketing campaign - A team theme song for instance.
Audelia: It very much depends on the country specificities. Overall, we know that most successful ringback tones are music related. But in some countries (e.g. Turkey, China) jokes are very successful too.

Scott: Can we compare the adoption curve in the US to Asia with the overall marketing budgets and educational campaigns?
Audelia: No. In Asia, more or less from day1, all operators and content providers invested in the service. Therefore awareness grew almost over night and service adoption was much faster.

Scott: Do you think there is a correlation between the age of ringback tones users and the fact that ringback tones are only for post paid? Whereas ringtone sales are for both pre and post paid?
Audelia: RBT are not only for post paid in most countries in the world. If that's the case in the US, it certainly has an impact on the average age of RBT users.
Xen: We run into a great example of Hutch, the Indian mobile operator, which sells ringback tones for prepaid with Fun Cards. Here is the TV ad:

Scott: How many telcos have a pre paid ringback tones service? I know Telefonica launched with Comverse but are there any elsewhere in the world?
Inbal: yes. Most operators in APAC & Eastern Europe have prepaid ringback tones service as in most cases over 80% of their users are prepaid.

Scott: Overall is the ringback tone service a less developed service than sms b/c essentially it is a voicemail technology and carriers have little faith in old technology?
Audelia: What do you mean by voicemail technology? Ringback tones is less developed mostly because it has no functional benefit, whereas SMS obviously do. Moreover, ringback tones require constant marketing efforts, whereas it's not the case for SMS. So it's less a matter of faith and more a matter of efforts required in order to promote the service and generate revenues.

Thank you Scott, Audelia and Inbal for this spontaneous interview! :) If you have further questions, feel free to send them over.

Seamus McAteer of M:Metrics on the Ringback Tones Market (Part III)

Welcome to the third part of the ringback tones coverage. Today, Seamus McAteer will be visiting here. Seamus is a co-founder, chief product architect and senior analyst at M:Metrics. Seamus has covered the wireless industry since the early 1990s and has earned a reputation as one of the most respected and credible analysts in the industry. He held director and research fellow positions in several corporations analyzing internet and communications technology before founding his own wireless and telecommunications advisory services firm. He is frequently sought by the media for expert commentary on wireless, Internet and related technologies.

If you missed the previous two part here are the links: the first part and second part.

Seamus, the stage is yours:

Hi Seamus. Thank you for visiting Xellular Identity :) How are you?
Great, thanks :)

What kind of business models exist today in the ringback tones market?
Pricing for Ringbacks can vary quite considerably. Most operators charge a monthly fee of between 99 cents for Cingular and Verizon and $1.49 for T-Mobile. Sprint charges $2.50 for use of a tone for a 90 day period. Some operators such as Boost charge a monthly subscription fee for use of a song. Again, like the issue with lots of different names, lots of different pricing schemes has got to create some confusion.

Labels like Ringback tones because it yields a nice recurring revenue stream and they get a nice royalty payment as operators will use a label-owned recording by the artist, this is not the case for poly tones for example. As a result labels can expect so share north of 30% of the retail revenue in most major markets.

Do you see correlation between market adoption and churn for ringback tones?
Comparing adoption rates and churn across markets it is evident that as adoption climbs churn falls. For example Spain has the highest level of adoption among the markets with track with about 10% of Spanish mobile subscribers over 13 reportedly using the service and it has the lowest churn rate of about 12% in a month. Italy has the highest churn of over 20% monthly and the lowest rate of adoption after the UK at about 3%.

Any examples of marketing best practices?
Verizon has the highest level of awareness and lowest churn for ringback services in the US. Its packaging of the services has been effective – it uses an introductory notification to tell the caller that their party is being reached. It’s launch was also effective, it worked closely with Warner Music on a mutual campaign.

Anything else to add to this interview?
Nothing, except that it was nice to hang out with you and the Comverse team at your customer event in Miami to talk about theories of social networking and the ringback market!

A big thanks to Seamus for his willingness to put the time and effort to convert his presentation given at the Fun Dial marketing Seminar (April 2007, Miami) into an interview and share with us all. :)

Seamus McAteer of M:Metrics on the Ringback Tones' Market

Welcome to the second part of the ringback tones coverage. Today, Seamus McAteer will be visiting here. Seamus is a co-founder, chief product architect and senior analyst at M:Metrics. Seamus has covered the wireless industry since the early 1990s and has earned a reputation as one of the most respected and credible analysts in the industry. He held director and research fellow positions in several corporations analyzing internet and communications technology before founding his own wireless and telecommunications advisory services firm. He is frequently sought by the media for expert commentary on wireless, Internet and related technologies.

If you missed the first part, just follow this link.

Well, let's welcome Seamus:

Hi Seamus. Thank you for visiting Xellular Identity :) How are you?
Great, thanks :)

What are the market size estimates for ringback tones?
M:Metrics tracks use by end-users not revenues. In terms of overall usage we are talking about a service that was being used by about 9 million or so subscribers in the US in April, which is a doubling over the prior year.

How significant contributors to the overall revenue are the ringback tones to be in the future?
If adoption creeps up to about 20% in five years -- which is feasible --  then we are talking about a market with 50 million users spending about $3.50 per month if we account for increased switching and purchase of new songs etc. as people get more used to the service. Then we are talking about a market worth $2.1 billion just in the US. Not bad but still only 1% of all revenue. Ringbacks will be one component of the mobile music market which will include full tracks, music videos, video tones, and master tones. Music is a strategic priority for operators along with video, games, mobile Web, and advertising.

What are the barriers for market growth of ringback tones?
I think that the big barrier for growth in the market is marketing and education. We are getting beyond the early adopter stage where there is really significant social risk associated with use of ringbacks and people are confused when they hear a ringback and hang up. This is particularly the case among subscribers under 35 years of age. To get beyond the early adopter group there needs to be clearer marketing of the service and simplified pricing. The fact that there is no accepted consumer friendly generic name for the category is a real breather of confusion. The term Ringback is actually used as a brand name by Verizon and other operators have shied from using it.

Who are the major players?
Among operators in the US Verizon and T-Mobile, which launched services towards the end of 2004, have a lead in the market with adoption among their base of about 7%. Verizon leads on a market share basis given its substantially larger base of subscribers. Sprint is next in the market in terms of conversion with about 5% of its base.

The major players among vendors are RealNetworks through its acquisition of WiderThan and Comverse. NMS would be another major vendor in the market.

Thank you Seamus :)
Seamus will be here next Tuesday with more of M:Metrics insights about the American market of ringback tones -- so don't forget tune in!

Seamus McAteer of M:Metrics on the Ringback Tones' Consumer

Hi all,

Today I have the honor to host Mr. Seamus McAteer at Xellular Identity. Seamus is a co-founder, chief product architect and senior analyst at M:Metrics. Seamus McAteer has covered the wireless industry since the early 1990s and has earned a reputation as one of the most respected and credible analysts in the industry. He held director and research fellow positions in several corporations analyzing internet and communications technology before founding his own wireless and telecommunications advisory services firm. He is frequently sought by the media for expert commentary on wireless, Internet and related technologies.

First time our paths crossed was when M:metrics published their report about the ringback tones market titled "Ringing(back) into the year":

According to M:Metrics, the mobile market authority, while ringtone purchasing declined in Europe and leveled out in the U.S. market, a new star was rising: the ringback tone.

The mobile measurement firm found that ringbacks have grown most aggressively in the United States, at a rate of 225 percent from the quarter ended January to the quarter ended November. Ringback subscriptions grew across Europe, at a rate of 150 percent Germany and 146 percent in the U.K. during the same period. Between July and November, ringbacks grew 12.8 percent in France and 11 percent in Spain.

“The rise in ringbacks indicates that personalization remains an important motivation for mobile content purchases,” said Jen Wu, entertainment analyst at M:Metrics. “While we see a decrease in ringtone purchases, we do see an increase in user-created ringtones. Since it’s impossible to hack a ringback tone, this growing market is not threatened by piracy and end-user savvy.”

[via M:metrics]

After reading the report I really wanted to interview Seamus about it; then I was very lucky to actually meet Seamus in person and hear his presentation about the ringback tones market in the USA at the Fun Dial Marketing Seminar. His presentation was very interesting and I really appreciate Seamus' willingness to put the time and effort to convert it into an interview and share with all of my readers.

Getting to Know Seamus

Hi Seamus. Thank you for visiting Xellular Identity :) How are you?
Good… jetlagged after a trip to China, but otherwise all is well.

What brought you to the world of mobile?
I covered the mobile sector as an analyst since the mid-90s when I was with SRI International, a big technology think tank. I wound up picking up coverage of mobile data and handheld computing for a number of syndicated services which were offered by the Business Intelligence Center. I was more of a generalist technology forecaster at the Center before I fell into a specialization in mobile.

What takes up your time other than mobile?
Since I founded M:Metrics in 2004 I have had limited time for a lot of things that I enjoy outside of work. Time with friends and family are a big priority. I love to run trails in the Bay Area, enjoy studying history, and love live Jazz.

Something interesting to share with the world about you?
I have 8 sisters and 2 brothers. We are all close, like an Irish clan, and family gatherings are a lot of fun.

The ringback tones' Consumers

What is offered in this market today?
M:Metrics tracks the market for mobile content and applications in the US and leading markets in Europe. In the US about 10 operators offer ringbacks branded using various monikers such as Calling Tones from Sprint, or Answer Tones from AT&T, and Calling Tunes for T-Mobile. All of these names for the same generic category have got to be confusing for customers.

How users become aware of the ringback tones service?
Ringbacks have built in viral adoption appeal. I think that most people learn about ringbacks when they hear it when they call a friend. Awareness differs significantly by operator which shows that marketing must also have something to do with building awareness.

Who buys ringback tones?
Subscription to ringback services is gender neutral almost 50:50 male to female adoption in the US. Consumption skews young with a median age of about 28 but it is older compared with ringtone purchase, which has a median age of under 27, or listening to music loaded over the air which has a median age of close to 24. African Americans are more than 2.5 times more likely than the market average to subscribe to ringback tones.

Thank you Seamus :)
Seamus will be here next Tuesday with more of M:Metrics insights about the American market of ringback tones -- so don't forget tune in!

Ringback Tones: The Future Digital Music Distribution Channel?

"The overall value of the worldwide music industry has been in decline for several years, falling from a high-point of $39.7 billion USD in 2000 to just $32.1 billion USD in 2006." This is the main drive for the music labels to look for new outlets. One of them is the mobile music market. Lately, we have been witnessing a new marketing approach on behalf of the music labels; the ringtone and ringback tone have started to replace the old single played at the radio stations. Music labels now have been providing exclusivity for new singles mobile operators for a limited time, many times before the album has been even released.

What are the benefits of using this method?

• For the users - users are attracted to the exclusive and hot ringback tone and want to have the latest and hottest new song;
• For the operators - operators create more awareness to the ringback tones service, they generate more usage and hopefully more penetration of the ringback tones service. Also they are perceived as innovative, cool, updated with the current music… And, let's not forget that later on, after the exclusive ringback tone expires, they will notify the users and offer a new ringback tone and so on…
• For the music labels - music labels get the public to spread the word about and play the new release, i.e. increase awareness to the new song and drive sales later on when the album is out.

In Malaysia,

"pop singer Misha Omar released 2 singles as a digital single/truetone, some three months before the scheduled full album release. "This is the way the industry is moving. It looks like we will be doing it for all of our artistes," said Sony BMG managing director for Malaysia, Adrian Lim. Warner Music's new media development manager Wong Mei Chen said the company is also walking down the same path. "That's the trend that the business is going into. You'll be seeing more of that. You'll hear it as a ringtone before you hear it on radio." Wong cited examples like Linkin Park where the ringtone for the What I've Done single, which was released two months before the Minutes to Midnight album in May."

[via The Star Online, Thanks Gabi!]

However, this trend is not limited only to the more advanced Asian markets; some popular international acts are even beginning to sell more ringtones than albums: The Pussycat Dolls, for example, sold close to 80,000 ringtones of songs like "Don't Cha and Beep" while their album only sold about 50,000 copies."
[via The Star Online]

Also, In the past, I presented here another 2 international examples:

• American operator Sprint has used this marketing strategy when it offered, EXCLUSIVELY, Pearl Jam's "World Wide Suicide" single both as ringback tone (Caller Tone) and ringtone.

• And Orange France offered Johnny Hallyday's new ringback tone (Fun Tone) "La loi du silence" exclusively to its users. And here's the clip:

Seems like ringback tones might be the future digital music distribution channel. Any comments? :)

Ringback Tones: The APAC Operators Cash Cow

The Ringback tone service has been highly successful ever since its early launching days back in 2002. The first introduction of customized ringback tones was made by the South Korean operator SK Telecom with its 'Color Ring' ringback tones service. SK Telecom generated over €80 million (US$100 million) in Q2 2002 and has reached 54% of SK Telecom's 18 million subscribers in penetration. In the Asian market in general, the ringback tones service has maintained an average of 20% service penetration across the board, with some operators reporting up to 50% penetration.

Ongoing content usage is a key success factor to the strong ringback tone business case, and content consumption is also very high in Asia. Operators in the region report that customers frequently change their content to fit their mood, style, musical taste and just for fun. Nevertheless, it is amazing to witness the amazing ongoing uptake of ringback tones in APAC today:

"A leading wireless internet company in China recently published its results for Q1 2007, among them its Colour Ringback Tones service results:

Out of total revenues of US$35.14 million in 1Q 07, the Colour Ringback Tones Service’s revenues were US$3.35 M, which are 10.5% of the total wireless Internet service revenues in the quarter. This figure is an up of 45.6% quarter over quarter and up 36.2% year over year. Colour Ringback Tones revenues made up.

The company also states that the Colour Ringback Tones business “continued to increase quarter over quarter due to Chinese New Year related and other event driven promotional activities with mobile operator partners. While Colour Ringback Tones revenues increased year over year due to our expanding relationship with China Mobile's centralized music platform and continued declines in the average unit price of Colour Ringback Tones, stimulating end-user demand."

[via Sys-con Media]

As you can see, the ringback tones service has been and still is a “cash cow” for APAC operators. Hopefully will see more European and American operators reaching these great numbers as well.

Sprint: Leveraging Email Communication for A Successful Campaign

Hi everyone,

Getting back from the Fun Dial Marketing Seminar provides so many new topics to share with you :)

Today, I will review a very interesting and effective marketing campaign that basically don’t cost operators so much as above the line marketing activities (like mass advertising). The American mobile operator Sprint was facing a situation by which it had low ringback tones content downloads by existing subscribers, low awareness of people to the service and limited marketing budget.

Accordingly, the campaign’s objectives were
• To increase ringback tones downloads
• To increase number of ringback tones service users
• To increase awareness to ringback tones service

Sprint sent an email to a targeted group of 500K subscribers which constitute the ‘power users’\ heavy content services users. The reason for targeting only a certain group (and not the entire install base) was to intention to reach a critical mass of users - including “opinion leaders” – in a short period of time and leverage the viral nature of the ringback tone service. Having a core of users is what is needed to create a buzz.

This group of heavy users was offered James Blunts’ famous “You’re Beautiful” ringback tone (Call Tone) for free. The rational was to choose a famous musical track which is known to most people and “fit” wide range of ages and cultures. The drive to action was a click on link - “Try it - click on the “Download” link below” relying on impulsive buying behavior [see the image of the email]:

This simple button automatically activated the ringback tones service for those users.

The impulsive drive to action didn’t fail Sprint. In a matter of days it got an 8% of conversion rate out of the targeted recipients\population; meaning, Sprint pin pointed the “right people”. Also, Sprint witnessed an over 30% growth in weekly downloads.

In conclusion, choosing the right content and targeting to the right segment are key success factors. Also, with minor marketing investments substantial revenue can be generated.

Ringback Tone Current Market Overview

Back in 2002 was the first introduction of customized ringback tones, made by the South Korean operator SK Telecom with its 'Color Ring' ringback tones service. SK Telecom generated over €80 million (US$100 million) in Q2 2002 and has reached 54% of SK Telecom's 18 million subscribers in penetration.

In spite of the rapid growth and high penetration of ringback tones in South Korea, western operators decided to take an approach of “we will wait and see” towards the new app on the block. Having a lesson learnt about different markets behaving differently through the i-mode experience, western operators realized that not every "killer app" in Asia would necessarily stick in the USA and European markets.

Despite of the cold welcoming, today Ringback Tones is becoming one of the biggest mobile entertainment revenue generators. In some operators Ringback tones are overtaking ringtones sales. In Europe and North America there’s a 60%-80% of Ringback Tone potential end-user-coverage, 80%-90% wireless operators are expected to launch the service by end 2007, and at least one operator in each Western European countries and almost all in North America has already launched the service. Also analysts forecast a substantial ringback tones market growth in the upcoming years.

At present, most of the operators are facing various challenges in the way to increase Ringback Tones service penetration, create on going usage of content, increase the awareness and in general turn Ringback tones into a more successful service. Understanding operators' needs and challenges Comverse Fun Dial (Comverse’s Ringback Tone brand) team came up with the idea to hold the first ever marketing seminar focusing the American and Latin American markets. The Fun Dial Seminar brought together leading industry experts, Fun Dial customers and operators, (some that have already launched the service and some which are on the process of launching), as well as content providers, music labels and managed services providers to facilitate an environment of knowledge sharing and to create an open forum to discuss burning issues related to Ringback Tones.

Opening the second day, Seth Schachner, VP Latin Americas Markets at Sony BMG, presented the role of content in the success of mobile music. “Music and content are ever seeking creative new distribution channels. The wide adoption of cellular by a wider range of demographics, younger segments, music savvy’s etc’ has opened new avenues of revenue for both mobile companies as well as the music industry” He Said.

For those of you who weren't able to attent the Seminar, I will cover here some of the study cases presented at the Seminar:

• How to turn the Ringback Tone into a successful service generating significant revenue?
• Two case studies of successful Ringback Tone marketing strategies led by mobile operators
• The Comverse Fun Dial's vision on the future of the Ringback Tones service
• The current market of ringback tones according to M:metrics

You're welcome to tune in every Tuesday for a part of this series!

The B-tones Are Coming...

"Oh, did you mean Cingular's Answer Tones, 3's Dialtunes, Francetelecome's Fun Tones, or Cosmote's Calling Tunes...? And in Israel, is it Funtone (Orange) or Pleasant Waiting (Cellcom); in the UK, is it Calling Tunes (Orange) or Caller Tunes (T-Mobile)? "

-Confused?
-It's clear. There's a name problem!

To put an end to this, as well as increase consumer's awareness to the ringback tones service, we were looking for a generic name and you helped a lot by voting on our suggestions. As promissed, here are the results of the pole:

B-tone wins with 54.3% of the votes! Now our mission would be integrate the new name in our daily vocabulary. Hey, if Nokia managed to exchange "mobile phone" with “multimedia computers”, the sky is the limit!

BMI: Ringback Tone Market Streaming Up

Another player of the ringback tones eco-system reinforces the forecasts of a substantial growth for the entire ringback tones market:

“Broadcast Music, Inc. (BMI), the leading U.S. performing right organization representing more than 6.5 million musical works from more than 300,000 songwriters, composers and music publishers, today released its annual projection for U.S. ringtone sales and for the first time released a U.S. ringback tone market projection for 2007.

BMI projects that ringbacks will generate approximately $65 million (U.S.) in retail content revenues in