Ringtone provider Moderati charts new direction

Content aggregators are fleeing the ringtone dance floor and scrambling to develop different types of content and build new business models.
The latest vendor to read the writing on the wall is Moderati Inc., a Santa Monica, Calif.-based ringtone provider. The company this week should announce it has been acquired by Bellrock Media Inc., a two-year-old content company with operations in the United States and Japan.
Moderati has gained impressive ground as a ringtone aggregator for U.S. network operators. The company’s carrier partners include all four tier-one service providers, as well as well as youth-focused mobile virtual network operators Amp’d Mobile, Boost Mobile, Helio and Virgin Mobile USA L.L.C.
But like its competitors, Moderati has been squeezed by increasingly slim profit margins in the face of onerous carrier revenue-share models. And network operators are beginning to strike deals directly with record labels, cutting ringtone vendors out of the loop completely.
“The ringtone business is challenged; our margins in the middle are challenged,” Moderati President Carolynne Schloeder said. “We began to recognize that a few years ago.”
Worse, the U.S. ringtone market continues its gradual descent. The percentage of users downloading the music clips lost steady ground last year after peaking during the summer, according to M:Metrics, jumping slightly only during the holiday shopping season.
As such, content providers are scrambling to bring new offerings to market and embrace other digital platforms. UrbanWorld Wireless last week announced a high-profile advisory board in an effort to move beyond mobile content into the broader world of digital media. Kargo Global Inc., a New York-based vendor, offers voice tones from comedian Gilbert Godfried. And Moderati is hoping to find an audience with Mobile Faker, a service that offers wallpaper downloads of non-existent pets or significant others, and incoming calls that serve as an excuse to duck out of bad dates.
Bellrock’s new subsidiary is looking to do more than just expand its content offerings, however. Bellrock’s backers include Intel Corp. and Faith Inc.-Moderati’s former parent company-as well as Yoshimoto Kogyo Co. Ltd., a Japanese entertainment behemoth. “We’re in bed with the biggest and the baddest in Japan,” said Bellrock President Peter Levin.
Moderati will move into community-based mobile games, according to Levin, and will explore direct-to-consumer distribution models in addition to selling its wares on carrier decks. It hopes to partner with brands to deliver mobile marketing efforts and ad-supported mobile content and services. “We’re not going after the Jamstsers and the Thumbplays in that space,” said Schloeder. “We’re very focused on creating new consumer entertainment services; sponsored, advertising funded-services.”