MMW-42 -- The US Ringtone Market Gets Active

J@pan Inc Magazine Presents:
Commentary on the week's music technology news

Issue No. 42
Tuesday, May 6, 2003



++ FEATURE: The US Ringtone Market Gets Active

- All Eyes on Apple's iTunes Music Store
- Samsung Licenses Gracenote Song-Recognition Technology
- Sony Pictures Digital to Acquire Sonic Foundry's Software
- Students Agree to Pay RIAA in Lawsuit Settlement

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++ FEATURE: The US Ringtone Market Gets Active

Compared to Asia and Europe, the US has so far lagged considerably
behind in mobile-phone technology, including audio. This year,
however, several new models that feature 16- and 32-voice polyphony
are set to be released. At the same time, a few of the major Japanese
ringtone providers, after watching the US market carefully for the
last two years, are rumored to be launching new US services this year.

The two major platforms in the US for polyphonic ringtones are Verizon
and AT&T Wireless. On the Verizon side, ringtone providers must
develop their own Brew application for downloading and playing
ringtones -- a fairly significant barrier for prospective content
providers. Users pay about $1.50 to $2.00 for a single song, with
discount packages available for downloading multiple songs. For AT&T
Wireless, ringtone sites are offered as part of the mMode service,
which despite some major technical differences, is based loosely on
NTT DoCoMo's i-mode model. It is somewhat easier to develop an mMode
ringtone site, but at least at present, there appear to be fewer
services available. Download rates per song are comparable to the
Verizon services.

The primary handsets supporting polyphonic ringtones in the US include
models from LG, Audiovox and Kyocera (Verizon), and Sony Ericsson,
Panasonic, Siemens, and Nokia (AT&T Wireless). Motorola's T720 is the
most widely used model, however, and is available for both Verizon and
AT&T. The T720 contains a Yamaha MA-3 chip, but due to a software
glitch, is unable to play Smaf files. Some of the initial ringtone
providers appear to have discovered a way to work around the problem,
but according to one prospective provider, newcomers are forbidden by
Verizon Wireless to use it. Meanwhile, Motorola's upcoming T730,
slated for a midyear release, also sports an MA-3 and is reported to
have no problems with Smaf.

Although we were unable to obtain much information on ringtone
providers for AT&T Wireless, there is still a good bit to be learned
from the five ringtone services available on Verizon. Three of these
services were developed by US subsidiaries of Japanese companies.
Modtones (Faith West), MyTonz (Mitsui Comtek) and XRinger (Kanematsu
USA) comprise the best of the general sites. Modtones has a
particularly impressive offering, including a large selection of Latin
Music produced by Miami-based Wireless Latin Entertainment. Rounding
out the Verizon providers are Moviso's Ringster and Jamdat's LOTR Tone
Player, which offers music from the Lord of the Rings movies.

While still small compared to Japan, the US market for polyphonic
ringtones is now being watched carefully by many Japanese providers,
and is expected to grow quickly over the next year or two. While exact
sales figures are not available, Faith West is rumored to be making
well over $300,000 per month in revenue from its Modtones site, and
nearly all of the services report rapidly growing user bases. With the
early revenue and growth potential shown so far, expect to see a few
more big names from Japan, including NEC, open their own ringtone
services on Verizon and AT&T Wireless this year.

-- Steve Myers

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** All Eyes on Apple's iTunes Music Store

In Brief: Since it's much-hyped opening at the end of April, Apple
Computer's new online music store has received well-publicized praise
from recording artists and industry experts alike. In contrast to the
Windows-based online music services, Apple's iTunes does not require
the user to pay a subscription fee. Users are instead able to download
single songs for 99 cents or albums for $9.99 and can transfer the
songs to their iPods or burn them on CDs. The service features over
200,000 songs from all of the major record labels. Apple reports that
an estimated 275,000 tracks were sold in the first 18 hours of
operation. The company has also said that a Windows-compatible version
of the service will be available by the end of the year. Despite the
praise, however, some experts are questioning whether iTunes will be a
profitable undertaking for Apple, which has a well-known history of
developing innovative, intuitive products that ultimately struggle in
the marketplace.


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** Samsung Licenses Gracenote Song-Recognition Technology

In Brief: Gracenote announced at the end of April that it had signed
an agreement with Samsung whereby the Korean electronics giant will
use Gracenote's CDDB music recognition on its MP3 players. The CDDB
recognition will first appear on over 1 million units of Samsung's new
Yepp line of MP3 players.


** Sony Pictures Digital to Acquire Sonic Foundry's Software Products

In Brief: Sony Pictures Digital and Sonic Foundry reached an agreement
recently whereby Sony Pictures Digital will acquire all of Sonic
Foundry's desktop software products, including the popular Acid and
SoundForge series, for $18 million in cash and assumption of various
payables and liabilities.


"The Final Showdown," a feature on digital film from our May 2002

** Students Agree to Pay RIAA in Lawsuit Settlement

In Brief: On May 1, four college students agreed to pay the Recording
Industry Association of America (RIAA) between $12,000 and $17,000
each in order to settle a music piracy lawsuit brought against them.
The students had been running services that searched school network
computers for MP3 files. The lawsuit was the first of its kind by the
RIAA aimed at students rather than companies. The lawsuits were widely
seen as part of a broader strategy by the RIAA to crack down on
university file swapping. At other universities, including
Pennsylvania State and the Naval Academy, school officials have issued
reprimands for file-swapping recently.


"File-Swappers Download 75 Million Music Files," a news item from our
August 2002 issue

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Written by: Steve Myers (
Steve Myers is president and chief enthusiast of Theta Music
Technologies, which specializes in the development of music-related
software applications.

Edited by J@pan Inc editors: (


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