In another move indicative of the music industry’s increasing frailty, two of its largest players are trying some new twists: Sony BMG Music Entertainment and Universal Music Group last week announced a new format they’re calling the “ringle.”
Each ringle will contain one ringtone bundled with a hit single, maybe one remix and an older track on a CD with a slip-sleeve cover. The ringtone will have to be redeemed online after popping the CD into a computer.
Sony BMG, which came up with the idea, is expected to release 50 ringles during the next two months while UMG will release as many as 20. Prices are expected to range from $6 to $7, which could carry a gross profit margin of anywhere from 31% to 42.7% for the labels.
And the rest of the industry isn’t far behind; other labels are expected to follow suit over the coming months. However each label will have to cut a deal with a digital aggregator to enable consumers to redeem the ringtone bundled with every ringle.
Bundled innovation
The music industry has largely been successful at introducing new formats over the years, but there have been many missteps along the way. The big question is whether the new bundled format will drive music fans back to record stores.
“I think it’s a very compelling bundle,” said Karen Allen, general manager of Mobile Entertainment Forum Americas. “I like seeing these sorts of creative ways to package content.”
While Allen thinks it’s healthy for the music industry to take chances on new ideas, she was surprised the industry left out an over-the-air download component for the ringtones.
“If you look at the retail trends, the consumers are saying the exact same thing,” she said.
“I kind of wonder why they don’t see the (over-the-air) market with this new bundle. Rather than going the old-school way with a CD,” Allen said. “I’m a little surprised they didn’t do both.”
And the labels could do so much more.
Music fans have been leaving the physical world in droves of late, instead opting to purchase full-length tracks for $1 online or, in some cases, over-the-air on their cellphones. And as of last week, ringtones are now available for $1 (on top of a $1 song purchase) on Apple Inc.’s iTunes store. That’s to say nothing of the growing cluster of fans who are sideloading their own ringtones directly from their existing music collections.
Not all convinced
Ringtones, while largely considered to be the first product type that brought music to the cellphone en masse, are mostly the baseline for mobile content now, MEF’s Allen said. “In terms of what’s compelling on mobile phones, it’s not music ringtones anymore,” she said.
Adam Sexton, chief marketing officer at mobile music aggregator Groove Mobile, said it’s great to see record labels embracing ringtones and trying to find ways to sell more, but he’s skeptical of the ringle format.
“This is very similar to some of the enhanced CD things that the labels tried 10 years ago, with very limited success,” he said. “It wasn’t as good a mechanism as we had hoped.”
Over-the-air downloads are popular because of the instant gratification they give consumers, Sexton said, whereas ringles will require a consumer to go to a retail store, purchase the CD for at least double the cost of a ringtone and then put the CD in a computer to redeem the ringtone. Of course, ringles will carry an added value with the additional full-length tracks.
