Ringtones- the next Napster?

Ring Tones have become quite a big business, but the issue of how much the copyright owner should get per ring tone has been hotly debated.  According to the U.S. Court of Appeals for the D.C. Circuit last week, 24 cents was the going rate as reported in the New York Law Journal. The price of the average ring tone download costs the consumer $1-$10 per download CNET This shows a sizeable markup for the ringtone agencies that many times start their business first and worry about copyrights and licensing second. The profit, however, is shared between the ringtone company and the cell phone service provider.

The agencies that once fought the uphill battle to regulate the digital music scene are now turning their sights on ringtones.  European moguls like Monstermob and Ztango are starting to partner with manufacturers to encroach on the American market.  The agencies include The Harry Fox Agency and The American Society of Composers, Authors and Publishers (ACSAP) that are trying to weed out ringtone sellers that are selling without licensing or approval from the copyright holder.  The biggest road block to regulating the agencies selling unauthorized ringtones is first finding them.  According to the Senior vice President, Chris Amenita, ACSAP is going through a long list of companies trying to find which ones are selling without a license. CNET The Harry Fox Agency has begun to sell ringtone licenses, but has only received 30 applications thus far.

According to the vice president of Broadcast Music Incorporated (BMI) there has been a shift in licensing in the past few months.  It seems that there is more of a peer to peer licensing that is steering the ringtone market in the direction of napster. CNET. With the naptser and other online sharing sources setting the precedent for digital music dissemination, it may seem that ASCAP and other agencies like it are going to have a tough battle to regulate the ringtone industry.

There are some international complications to the ringtone debate as well.  This difference stems from the different licensing requirements of global markets.  In the European countries, many ringtone sellers are only required to obtain one license from a music publisher that would cover all the music they make, whereas in the United States ringtone sellers have to pay out individually.  The US sells out mechanical licenses to reproduce (in different mediums) the songs of different artists.  This creates a heated debate when a company dully authorized to reproduce and sell ringtones in a European country tries its hand in the US market. CNET It comes back to a question of where the ringtone was actually sold.  If the server is located in another country, can it be regulated by US laws? Additionally, the question has yet to be answered whether ringtones are performances or if they are just recordings.

It should be interesting to see where this battle leaves the music industry that is already working overtime to ensure that they are getting paid for the music and entertainment that they have created.

by Lauren Whiting, summer intern


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One response to “Ringtones- the next Napster?”

  1. secxevic pusken alexsander says :

    Ringtones express the personality of each person. I think this is a potential market.

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