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Wringing money out of new wireless services has become something of an obsession recently. And “ringing” may be exactly the right model. But can anyone predict what the next big thing in wireless will be?
Consider the most successful wireless service. If anyone had told me two years ago that it would be a booming business, I would have laughed out loud. That service is the sale of downloadable ring tones for cell phones. These polyphonic tunes are one of the few bright spots in the wireless telecom business. How bright? According to UK analysts The Arc Group, blindingly bright.
A recent study by Arc showed that sales of cell phone ring tones worldwide jumped 40 per cent in the past 12 months to $3.5 billion dollars. Its a positive note, especially for carriers that are feeling overextended in their 3G investments.
The average price of a polyphonic ringer, such as the theme song for Spiderman, is about 60 cents, according to the report, but prices vary from just 20 cents up to $3. (Yes, three-dollars for a ringer!) Revenue from sales is divided between the telecos, music labels, and artists. How much each segment receives varies, but it has to be good news for music companies as well.
The worldwide music market is estimated to be $32.2 billion in total. So that means over 10 percent of the total music business is in ring tones. With numbers like that maybe Billboard should switch from listing the top 100 albums to ranking the top 100 ringers.
So while music companies may be suing 12-year-old file sharers, they are jumping into the sale of downloadable refrains in a big way. Walt Disney-owned Hollywood Records recently hooked up with Xingtone, a digital content provider that delivers ring tones and pictures directly to cell phones. As part of a marketing push Xingtone will handle the online distribution of free ring tones and images from the likes of Hilary Duff and Josh Kelley.
Xingtone is primarily known for its software program that enables cell phone users to create custom ring tones from MP3s and WAV files on their PCs. The software works with phones from AT&T Wireless, Sprint, T-Mobile, and Cingular. Of course, this cuts the carriers out of the revenue stream. And as more users become more sophisticated about it, theyll simply rip their own songs and then transfer them without paying anyone any extra money.
So the question is, whats the next wireless fad and rainmaker?
To date, location-based services havent become a reality and there are plenty of concerns about how consumers will react to them. Games are being pushed (and how), but Monkey Ball notwithstanding, they havent gotten any traction yet.
Clearly camera phones are a hit, driving up handset sales and traffic. All thats needed here is for someone to come up with a terrific, fantastically wonderful idea about how to use those photos and drive even more traffic. Theres money to be made by anyone who can crack the 20-something wireless picture Zeitgeist.
In the meantime, there are a couple of offbeat ideas. MobiTV is pushing television content on Sprint PCS for $9.99. I describe it as “television content” because the frame rate is only a couple of pictures per second, a far cry from the 30 frames per second needed for full-motion video or to catch Janet Jacksons quick moves. Still, enough subscribers may be willing to sign up just to get live feeds of CNBC.
Stranger still are things I cant fathom, but that lets just say a “younger” audience seems to grok instantly. SMS (short messaging service) for one. I have reviewed hundreds of phones with the service but its never captured my interest. Then the other day I watched with amazement as my 20-year-old baby sitter tapped out an SMS note on her phone as if she were tying her shoelaces. (Come to think of it, it took me a while to master that task.) So it may be that theres money in the SMS hills to be had.
Or perhaps theres more interest in things like a mobile psychic service. Wirejack, a “mobile lifestyle entertainment” company is about to launch its Moonfire mobile psychic service. It will run on Qualcomms BREW platform, and Wirejack plans to follow it up with Chakra, a “personal lifestyle coach.” Dionne Warwick notwithstanding, beaming horoscopes, tarot readings, and psychic advice to mobile handsets seems downright silly to me. On the other hand, Wirejack plans to include “mystic ring tones” too, so perhaps theres a revenue stream there after all.
And what do I know? Im the guy that thought pay-to-play ring tones were stupid.