Sprint, Warner partner on cell ring tones

Warner Music on Wednesday announced a deal with Sprint to offer a streaming music clip subscription service and new ring tone features on Sprint cell phones, the latest in a series of tie-ups between record labels and wireless carriers that have the industry buzzing.

Selling ring tones, or musical jingles that play on cell phones, is giving a little boost to the otherwise gloomy music industry, which is grappling with a protracted slump in CD sales and struggling to establish commercial Web services to stem the black-market boom in online file-swapping.

"We're making money selling ring tones. Our philosophy is that this is a money-market enterprise from the beginning. We've already made more money than we've spent in launching these operations, which are not particularly expensive to begin with," said Michael Nash, senior vice president of Internet strategy and business development for Warner Music, a unit of AOL Time Warner.

Nash estimated the recording industry will take in $50 million from ring tones in 2003, with the business growing rapidly from there.

Warner has sold close to 50,000 ring tones in the past three months. Sales of ring tones in three weeks after launching a deal with AT&T in October exceeded the number of Web music downloads it has sold in a year-and-a-half.

The latest Sprint/Warner deal lets Sprint customers download ring tones and animated ring tone versions of songs. Artists from rock groups such as Devo can announce incoming calls, and clips of new music can be sampled via the wireless streaming music clip subscription service on Sprint PCS Vision phones.

More than 1.5 million ring tones are purchased on the Web each month in North America, with the youth market driving much of that demand, said Hal Bringman, a spokesman for Zingy, a provider of ring tones.

The wireless market appears to be more commercially viable for recording companies than the Internet, where the music industry has already sunk millions of dollars into lawsuits against song-swap services such as Napster and Kazaa.

Labels must battle to woo Web fans away from established patterns, analysts said, but wireless is a new frontier.

Another advantage is that labels can tap existing wireless vendors, making it simpler to collect subscription fees. There is also no thriving black market in the wireless arena, which exists on the Internet, analysts said.

The Yankee Group, a research firm, estimates that 74 percent of consumers aged between 18 and 25 will own a mobile phone by 2006, the largest percentage of any other marketing segment owning mobile phones at that time.

Cahners In-Stat predicts that mobile wireless Internet subscribers in the United States will grow from 1.7 million in 2000 to 69 million in 2004. But while trends appear promising, including the more than $1 billion spent on ring tones last year in Europe, the market has already drawn skeptics.

"A lot of people are looking for it to be the next best thing, but the primary use for the cell phone is for communication rather than content," said Lee Black, senior analyst with Jupiter Research.

Another industry watcher also noted that the market may grow more slowly in the United States than it did in Asia, Europe, or Latin America because computers are more available in America than they are in other parts of the world.

"The growth elsewhere has been phenomenal, but that may be because cell phones are the most readily accessible device. In the United States, everyone has a computer," a wireless executive said.

Nash conceded that ring tones are now a "utility" and a "personalization" item such as vanity license plates on cars. Still, Warner is gearing up and establishing partners for the future when wireless devices will be capable of handling more extensive content.

Story Copyright  © 2003 Reuters Limited.  All rights reserved.