Cell tunes helping ring up profits

Deseret News (Salt Lake City), Jun 2, 2003 by Lisa Napoli New York Times News Service

When Lauren MacNeil's cell phone rings, it plays none of the tinny preprogrammed tones that came with it, like "Fuer Elise" or the "William Tell" Overture.

Instead, it plays a few bars from one of three songs that MacNeil, a 14-year-old student in Clarksburg, Md., recently paid to download. "I got 'Livin' la Vida Loca,' because it sounded good; 'Big Pimpin,' big inside joke with my boyfriend; and 'Get the Party Started' -- I just like that song," she said.

The cost of sounding cool? Just under $6.

Though some people find a gimmicky cell phone ring as annoying as an overly loud cell phone conversation, teenagers think of their phones as fashion accessories. And executives in the music industry, stung by declining sales and digital piracy, see dollar signs in the trend.

"This is a great opportunity, and it's a much easier opportunity than the Internet," said Jay Samit, a senior vice president at EMI Recorded Music. "It's easier to buy music than to steal it."

Music and wireless executives cite figures like $1.5 billion -- the predicted total of ring-tone sales in Europe this year, according to Strand Consult, a Danish firm -- the way they once tossed around stratospheric projections of dot-com revenue.

"It feels like we rewound to 1995," said Richard Conlon, vice president of BMI, the music licensing concern, which has been working with recording labels, wireless providers and third-party businesses that sell ring tones to negotiate the complex web of publishing rights. "It's almost like a do-over."

Music executives acknowledge they were late to the Internet game. Once they started to pay attention to the new medium and to Napster and other file-sharing services that let consumers trade music, it was too late to throw a lasso around online distribution. So they are determined to keep a tight rein on ring tones.

The questions that plagued proprietors of Web businesses, most notably how to get consumers to pay, are more easily answered in the world of wireless, where the network is closed and the systems for payment are in place.

Specialized ring tones can be ordered and downloaded to the phone from a Web site, or depending on the phone, by using the phone itself. The charge is typically added to the cell phone bill.

"It's a much more secure market, more reasonable and more organized," Conlon said. And a consumer is unlikely to try to obtain free music by saying "I'm not going to pay my cell phone bill," he said.

Samit of EMI offered another reason for the focus on cell phones, saying that since August 2001 there have been more wireless handsets in use in this country than portable CD players.

Ring tones are just the start of a trend that Conlon and others in the wireless industry said they hoped would result in greater use of the medium for the enjoyment of music. As more advanced phones are introduced that play higher-fidelity sound, and as the mobile network technology improves, they want to condition consumers to download entire songs.

That is prompting alliances like the one AT&T Wireless signed with Warner Music, which will offer ring tones derived from its catalog of songs.

Big music companies are not the only businesses calculating the possibilities and signing deals. Small start-ups like Zingy, a year- old company based in New York, offer tones and downloadable celebrity (and celebrity imposter) voice-mail greetings.

Fabrice Grinda, Zingy's founder, must negotiate the layers of music publishing copyrights from the owners. "For one song, there could be 10 publishers," Grinda said. "I need to clear every song before I put it live. I have paid hundreds of thousands in copyright fees."

And that is music to the ears of the music companies and artists alike, particularly given the flat market for CD sales.