Ringback boom--or bust?

Ringback boom…or bust
Are ringback tones an industry success or failure? I've been asking this question for some time, and the responses I hear are mixed. Ringback tones have been available from U.S. operators for a year or two, but most carriers are using their marketing dollars to push full-song downloads rather than ringback tones. In fact, one carrier executive who didn't want to be identified recently told me that ringback tones have been unsuccessful in the U.S. market and he believes there is little chance of that changing.

Because I don't hear much about RBTs, it makes me wonder if anyone is buying them. I realize I may be older than the typical RBT buyer but I have yet to call anyone outside the wireless industry and hear one. A quick survey of some of my younger tech-savvy colleagues netted the same result.

However, a recent survey from M:Metrics indicates otherwise. According to Paul Goode, vice president, product development and senior analyst at M:Metrics, ringback tones have experienced "healthy" growth over the past six months and now have a penetration rate of 5 percent. In fact, M:Metrics stats say that there were 8.4 million ringback tone subscribers at the end of March 2007, up from 2.3 million at the end of December 2005. For operators, of course, the growth in ringback tones is good news because they derive a monthly subscription fee for the service. Verizon Wireless, for example, charges 99 cents per month for the ringback tone subscription and $1.99 for each ringback tone purchased.

Not surprisingly, ringback tone vendors also say that the service is still growing. Larry Moores, senior vice president, marketing and product management at WiderThan, a RealNetworks Co., says that viral marketing is helping ringbacks gain traction. "We think ringback tones will have a penetration rate of about 15 percent to 20 percent," Moores says. "We are even more optimistic than we were before."

And contrary to my experiences and those of my colleagues, Moores says that ringback tones tend to appeal to an older demographic group than those who buy ringtones. Also, males are bigger ringback buyers than females, Moores says.

Nevertheless, I'm still skeptical. Do you think ringback tones are a success in the U.S.? E-mail me at sue@fiercemarkets.com.