At today's special event at Moscone West in San Francisco, Apple announced that it will begin selling ringtones for the iPhone through the iTunes store. The service -- built into the iTunes application -- will allow users to customize tracks currently for sale through the iTunes store, selecting the portion they want, perform fades and other sound editing. After the track has been cut and edited as desired, the "Buy" button is pressed, and the tone is automatically transferred to the iPhone.
Pricing is as follows: You purchase the track for $.99, then pay $.99 to turn it into a ringtone, for a total purchase price of $1.98. It's not yet clear whether you can use tracks you have already purchased and pay an additional $.99 to use them as ringtones.
The service will be available sometime next week. It appears that you'll download a new version of iTunes, then the new feature will be triggered when it is added to the iTunes store, with a "Ringtones" tab appearing.
Last week, Ambrosia Software debuted a solution for transferring ringtones to the iPhone that does not require hacking or jailbreaking called iToner, priced at $15. This method has the advantage of not requiring additional purchase for tracks you already own, but does not include any built-in editing or cut-down mechanism.