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Record labels worry about ring tone software's potential

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Updated: 6/09/2004 9:55 am
By Dawn C. Chmielewski
Knight Ridder Newspapers

New software that lets anyone create unique cellular phone rings for free has some record labels worried it will kill the cash cow that is the ring tone.

The software, called Xingtone, evokes the same "oh wow, oh no" reaction from the labels that greeted the original Napster. The fear is that people will make ring tones out of pirated songs, thus compounding the file-sharing problem while robbing the music industry of a new source of revenue.

The quest for a distinctive cell phone ring has created a $3 billion global market for everything from computer-generated renditions of such classics as The Temptations "Just My Imagination," to near-CD-quality snippets of popular songs like OutKast's "Hey Ya!."

Ring tones are brisk business in Europe and Japan. They're catching on fast in the United States, where sales are expected reach $140 million by year's end, according to market research firm Yankee Group.

But just as the record labels have begun hailing ring tones as a welcome windfall to help offset free-falling CD sales, along comes Xingtone.

The Los Angeles company's $15 software, sold online, allows anyone with average computer skills to take an MP3 file or favorite CD track, trim it to create a 30-second ring tone and send it to the phone with the press of a button - just like a text message.

"It's problematic, because it has the potential to eviscerate the business model early in its development," said Ted Cohen, EMI Music's senior vice president of digital development and distribution.

Xingtone fans, such as Kathy Schader, a 29-year-old who lives in West Hollywood, see things differently. She describes it as a tool to express her individuality and varied musical tastes, which spans Bob Marley's reggae to the alternative rock of The Sundays.

"I had a few ring tones on my phone, but they were all sort of the beep bop boop: the Atari version of ring tones," Schader said of the songs she purchased from her phone company.

Now, Schader enjoys creating a sensation when her phone rings, while she's performing such mundane tasks as waiting in the supermarket checkout line.

"People stare. They wonder where the sound is coming from," said Schader. "Then they have a reaction like, `Oh that's really cool.'"

Reaction from the music industry is mixed.

Walt Disney's music label, Hollywood Records, entered into a promotional partnership with Xingtone to distribute ringtone songs from Hilary Duff, The Polyphonic Spree and Josh Kelley. And Artemis Records started distributing a free copy of Xingtone's software with every copy of Sugarcult's new album, "Palm Trees and Power Lines" to make it easier for fans to convert favorite songs to ring tones.

"The benefits of this technology are obvious," said Artemis Chairman and Chief Executive Danny Goldberg. "Every Sugarcult fan's phone will be like a mini-radio station, introducing passers-by to the new album."

Other label executives are less convinced of the promotional benefits - especially when ring tone sales are starting to pay dividends.

Until now, cellular phone carriers and music publishers have been the biggest beneficiaries of the ring tone trend. That's because most of the ring tones sold have been computer-generated compositions of popular songs. The record labels - and by extension, the performers - only get paid when someone buys the computerized version of a song.

The ring tone market is poised to explode with a new generation of mobile phones capable of playing actual recordings. Larry Kenswil, president of eLabs, Universal Music's new media and technologies division, predicts the global market for these real-sounding ringtone songs will be "massive."

"It's a lifestyle identification. It's more than consuming music. It's people labeling themselves with the music," said Kenswil.

Kenswil said Xingtone could undermine that emerging market.

"Anytime you give people the opportunity to get something for free that they'd otherwise pay for, they have a temptation to do that," he said.

Some cellular phone networks, such as Verizon Wireless, have taken steps to block songs they don't sell. Sprint PCS has opted not to; saying that software like Xingtone stimulate demand for wireless data services.

Jeff Hallock, Sprint's senior director of consumer marketing, quickly adds that his company doesn't support piracy: it works with the labels and the music publishers and sold 20 million licensed ring tones last year. He thinks do-it-yourself ring tones have limited appeal.

"It's not a mass-market kind of behavior," said Hallock. "But for a younger consumer who's more tech savvy, it's going to be more popular."

Xingtone's president, Brad Zutaut, said there is nothing ethically or legally wrong with people taking a snippet of a song they own - or indeed any other audio artifact, from flatulence to a favorite bit of dialogue from the Matrix - and transferring it their own phone.

"It's not just about music. It's about audio. These are 10-second alerts," said Zutaut. "Why shouldn't it make you smile when your phone goes off?"


© 2004, San Jose Mercury News (San Jose, Calif.).
Distributed by Knight Ridder/Tribune Information Services.

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