Ringtone sales fall 24 percent in 2008

Ringtone sales in the U.S. declined from $714 million in 2007 to $541million in 2008--a 24 percent year-over-year drop--according to research [1]firm SNL Kagan, which says the annual decline is the first ever posted for a U.S. mobile content category. In all, ringtones' share of total U.S. mobile music revenues fell from 80 percent in 2005 to 63 percent in 2008. SNL Kagan credits the slump to consumers learning to create their own ringtones by sideloading edited MP3 clips to their phones and in turn bypassing operators' direct sales channels. The firm adds it expects carriers will begin offering ringtones at reduced price points to rekindle consumer demand.

Despite faltering ringtone sales, overall mobile music revenues in the U.S. grew at a 20 percent CAGR from 2005 to 2008, led by growing consumer interest in full-track download options and ad-supported streaming radio services. "When we ask mobile music insiders what will replace ringtone revenues, RBTs (ringback tones) are most often mentioned," said SNL Kagan wireless analyst John Fletcher in a prepared statement. "We estimate this category grew at a 37 percent CAGR from 2005 to 2008, from $77 million to $199 million."

For more on the U.S. mobile music report:
- read this release [2]

Related articles:
Verizon turns up exclusive Pearl Jam ringtones [3]
Celebrity gossip impacting ringtone sales [4]

Study: Mobile music [5] experience satisfies most users