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Ring-Tone Sales Near $1 Billion

Ring tones, those ubiquitous, monophonic song recordings programmed into seemingly every teenager’s mobile phone, are quietly becoming a money-maker for the music industry.

A new study released Wednesday by London-based Informa Media Group said that authors’ collection societies collected $71 million in royalties from ring-tone sales in 2002, up 58 percent from the previous year.

Informa’s senior analyst Simon Dyson said the royalties figure – which is typically 10 percent to 15 percent of the total sales from ring tones – would suggest that the overall market is over $700 million annually, and quite possibly as high as $1 billion.

The proceeds are divided between operators, labels and the artists.

“This is probably the only upside for the music industry at the moment,” said Dyson.

Stung by rampant online piracy and CD-copying, recorded music sales have fallen for two straight years, and industry watchers believe it is in for another drop this year.

Critics blame the big five music giants – Universal, Sony, Warner, EMI and BMG – for failing to meet a burgeoning consumer demand to download songs onto portable devices or onto a PC’s hard drive.

Ring tones are a different story entirely. They started off as a promotional gimmick, with labels offering up decidedly low-fidelity renditions of new singles to Web sites and mobile phone operators as a way to keep fans humming along to their favorite artists.

Despite the poor sound quality, the practice of customizing one’s mobile phone with a favorite song grew with surprising speed.

Now record labels regularly grant rights to mobile operators and Web sites to sell ring tones.

Informa said download costs vary widely by country. For example, Russia’s largest mobile phone operator, MTS, charges 30 cents per download, while Vodafone in Australia charges $1.83.

Informa predicts the segment will expand significantly, particularly as more handsets with stereophonic playback hit the market.

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