Cellular Phone Ringtones

The Development, Transformation, and Commercialization of a Phones Most Basic Function

David Hutchinson
12/18/2012

TABLE OF CONTENTS TABLE OF AUTHORITIES ............................................................................................. 3 Articles .................................................................................................................. 3 Patents and Patent Applications ......................................................................... 3 Internet Websites ................................................................................................. 4 Cases ...................................................................................................................... 7 United States Code ............................................................................................... 7 TABLE OF FIGURES ....................................................................................................... 7 Executive Summary ......................................................................................................... 9 Introduction .................................................................................................................... 10 TECHNOLOGY ............................................................................................................ 11 The Short History and Vast Development of Ringtone Technologies ........... 11 INTELLECTUAL PROPERTY ................................................................................... 15 Current Intellectual Property ........................................................................... 15 Future Intellectual Property ............................................................................ 17 MARKET AND COMPETING TECHNOLOGIES .................................................. 21 Market and Market Leaders ............................................................................. 21 Competing Technologies: Smart Phones Changed Everything ..................... 25 LEGAL ISSUES ............................................................................................................. 28 Compulsory Licensing ....................................................................................... 29 CRITICAL ANALYSIS OF RINGTONE TECHNOLOGIES ................................. 32 The Future of Ringtone Technology ................................................................ 32 Lessons for Current Ringtone Companies ...................................................... 33 Suggestions for Future Ringtone Market Entrants ........................................ 34 CONCLUSION .............................................................................................................. 35

TABLE OF AUTHORITIES
2

Articles 1. Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the
Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006).

2. Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the
Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006).

3. Carmen Kate Yuen, Scuffling for A Slice of the Ringtone Pie: Evaluating Legal and Business
Approaches to Copyright Clearance Issues, 8 Vand. J. Ent. & Tech. L. 541, 542 (2006).

4. Jennifer Mariano Porter, Compulsory Licensing and Cell Phone Ringtones: The Phone Is Ringing,
A Court Needs to Answer, 80 Temp. L. Rev. 907, 929 (2007).

5. Willow Noonan, Antitrust, Intellectual Property, and the Itunes Ecosystem: A Study of the
Antitrust Implications of Apple's Fairplay Technology with A Nod to the Peculiarities of Intellectual Property, 50 IDEA 533 (2010).

6. Jeffrey A. Wakolbinger, Compositions Are Being Sold for A Song: Proposed Legislation and New
Licensing Opportunities Demonstrate the Unfairness of Compulsory Licensing to Owners of Musical Compositions, 2008 U. Ill. L. Rev. 803, 804 (2008).

7. Mario F. Gonzalez, Esq., Are Musical Compositions Subject to Compulsory Licensing for
Ringtones?, 12 UCLA Ent. L. Rev. 11, 14 (2004).

8. Bryan Dean, Recasting Ringtones As Public Performances: A Proposal to Amend Section 110(4)
of the Copyright Act, 39 AIPLA Q.J. 247, 249 (2011).

9. Daniel H. Mark, Wringing Songwriters Dry: Negative Consequences of Compulsory Licensing for
Ringtones, 10 Vand. J. Ent. & Tech. L. 533 (2008).

10. Kurt E. Kruckeberg, Copyright "Band-AIDS" and the Future of Reform, 34 Seattle U. L. Rev.
1545, 1546 (2011).

11. Carly Strocker, These Tats Are Made for Talking: Why Tattoos and Tattooing Are Protected
Speech Under the First Amendment, 31 Loy. L.A. Ent. L. Rev. 175, 176 (2011).

12. Daniel M. Simon, Cell Phone Ringtones: A Case Study Exemplifying the Complexities of the S 115
Mechanical License of the Copyright Act of 1976, 57 Duke L.J. 1865, 1866 (2008).

Patents and Patent Applications 13. Methods for Generating Music Using a Transmitted/Received Music Data File, Alaine Georges et.
al., Medialab Solutions, United States Patent No. 8,247,676 (August 21, 2012).

14. Polyphonic Ringtone Annunciatior With Spectrum Modification, Nevil Hunt, Matsushita Electric
Industrial Co., LTD., United States Patent Application No. 11/912,363 (Nov. 22, 2006).

15. Dynamically Generated Ring Tones, Michael Neuman, Brian K. McKnight, Apple Inc., United
States Patent Application No. 12/549,323 (Aug. 27, 2009).

16. Haptic Communication, Zoran Radivojevic et. al., Nokia Corporation, United States Patent
Application No. 13/231,697 (Sept. 13, 2011).

17. Ringback Advertising, Ronald Ho, Jennifer W. Lin, Google Inc., United States Patent No.
8,135,613 (March 13, 2012).

18. Contact Matching of Changing Content Across Platforms, Mazor et. al., United States Patent
Application No. 12/367,525 (Feb, 8 2009).

Internet Websites 19. Vringo, Vringo Provides Update on Mobile Patent Portfolio, August 25, 2011,
http://ir.vringo.com/phoenix.zhtml?c=235370&p=irolnewsArticle_Print&ID=1600315&highlight= (last accessed December 9, 2012).

20. Forbes, What Does Youre your Ringtone Say About You?, June 1, 2005,

http://www.forbes.com/2005/06/01/cx_de_0601ringtone.html (last accessed December 17, 2012).

21. MobiThinking, Global mobile statistics 2012 Part A: Mobile subscribers; handset market share;
mobile operators, December, 2010, http://mobithinking.com/mobile-marketing-tools/latestmobile-stats/a#subscribers (last accessed December 17, 2012).

22. AT&T, Inventing the Telephone, http://www.corp.att.com/history/inventing.html (last accessed

December 9, 2012).

23. AT&T, Western Electric Ringers, http://www.porticus.org/bell/telephones-technical-ringers.html

(last accessed December 9, 2012).

24. The New Yorker, Ring My Bell: The Expensive Pleasures of the Ringtone, March 7, 2005,
http://www.newyorker.com/archive/2005/03/07/050307crmu_music?currentPage=1 (last accessed December 9, 2012).

25. Detecon, The Digital Entertainment Evolution, http://www.detecon-dmr.com/en/article/theevolution-of-digital-entertainment_2007_10_31/page/4 (last accessed December 9, 2012).

26. Techsplosive, Evolution of the Rington: From Monophonic to Quality MP3s, June 2, 2012,
http://www.techsplosive.com/category/innovation/ (last accessed December 9, 2012).

27. Top Ten Reviews, Ringtones Then and Now, http://ringtone-software-

review.toptenreviews.com/ringtones-then-and-now.html (last accessed December 9, 2012).

28. Wise GEEK, What is a Polyphonic Ringtone?, http://www.wisegeek.com/what-is-a-polyphonicringtone.htm (last accessed December 9, 2012).

29. USA Today, Mastertones Ring Up Profits, November 29, 2006,

http://usatoday30.usatoday.com/life/music/news/2006-11-28-mastertones-main_x.htm (last accessed December 9, 2012).

30. Hongkiat, Custom Video as Ringtone For Incoming Calls on Android,

http://www.hongkiat.com/blog/video-ringtone-android/ (last accessed December 9, 2012).

31. AppStorm, 10 Gorgeous iPhone Apps for Making Your Own Ringtones, March 22, 2011,

http://iphone.appstorm.net/roundups/music-roundups/10-gorgeous-iphone-apps-for-making-yourown-ringtones/ (last accessed December 9, 2012).

32. Seer Systems, About Seer Systems, http://seersystems.com/about-2/ (last accessed December 9,
2012).

33. The Register, EFF Wins Request for Reexamination of Ringtone Patent,
http://www.theregister.co.uk/2009/01/07/eff_challenges_music_patent/ (last accessed December 9, 2012).

34. TUAW, Apple Working on Video Ringtones, http://www.tuaw.com/2011/03/07/apple-working-onvideo-ringtones/ (last accessed December 9, 2012).

35. Into Mobile, Apple Working on iOS Video Ringtones?,

http://www.intomobile.com/2011/03/08/apple-working-ios-video-ringtones/ (last accessed December 9, 2012).

36. Patently Apple, Apple Deams Up Some Cool Video Ringtones for the iPhone,
http://www.patentlyapple.com/patently-apple/2011/03/apple-dreams-up-some-cool-videoringtones-for-the-iphone.html (last accessed December 9, 2012).

37. Huff Post Tech, Vibrating Tattoo Patented By Nokia Alerts Users When Phone Rings, March 21,
2012, http://www.huffingtonpost.com/2012/03/21/vibrating-tattoo-nokia-patent-phoneringing_n_1369978.html (last accessed December 9, 2012).

38. Information Week, Nokias Vibrating Tattoo: A Bad Buzz, March 21, 2012,

http://www.informationweek.com/personal-tech/wireless/nokias-vibrating-tattoo-a-badbuzz/232602931 (last accessed December 9, 2012).

39. Unwired View, Google to Monetize Voice Via Ringback Advertising Auctions?, July 9, 2012,

http://www.unwiredview.com/2009/07/16/google-to-monetize-voice-via-ringback-advertisingauctions/ (last accessed December 9, 2012).

40. Grab Stats, Detailed Information About Ringtone Downlads,

http://www.grabstats.com/statmain.aspx?StatID=104 (last accessed December 17, 2012).

41. PR NewsWire, Jamster! Brings European Mobile Phenomenon Crazy Frog to America,

http://www.prnewswire.com/news-releases/jamster-brings-european-mobile-phone-phenomenoncrazy-frog-to-america-54772012.html (last accessed December 17, 2012).

42. JESTA Digital , About Us, http://www.jamster.com/corp/about-us/products/prices/ (last accessed

December 17, 2012).

43. CAFA Law Blog, CAFA Meets Jamster: Kill the Crazy Frog, February 22, 2010,

http://www.cafalawblog.com/-case-summaries-cafa-meets-jamster-kill-the-crazy-frog.html (last accessed December 17, 2012).

44. Cnet, News Corp. Takes Majority Stake in Jamba, September 12, 2006,

http://news.cnet.com/News-Corp.-takes-majority-stake-in-Jamba/2100-1027_3-6114809.html (last accessed December 17, 2012).

45. Mac Most, Apple Quarterly Results Show Soaring Priofits, April 21, 2011,

http://macmost.com/apple-quarterly-results-show-soaring-profits.html (last accessed December 17, 2012).

46. Apple, Buying iPhone Ringtones, http://www.apple.com/findouthow/music/itunes.html#storebuyingiphoneringtones (last accessed December 17, 2012).

47. Bloomberg, Vringo Ringtone Startup From Israel Vies With News Corp. Unit, December 17,
2009, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ay4CsC8itZ_w (last accessed December 17, 2012).

48. Daily Finance, Buy, Sell or Hold: Vringo, December 8, 2012,

http://www.dailyfinance.com/2012/12/08/buy-sell-or-hold-vringo/ (last accessed December 17, 2012).

49. The Next Web, Mobile Tech Firm Vringo to Sell $31.3m Worth of Stock to Buy over 500 Nokia
Patents for (at least) $22m, August 9, 2012, http://thenextweb.com/insider/2012/08/09/mobiletech-firm-vringo-to-sell-31-2m-worth-of-stock-to-buy-ip-from-nokia-and-more/ (last accessed December 17, 2012).

50. Reuters, Closer Look: Vringo Now Stands to Earn Over $600 Million in High-Margin Royalty
Revenues Through 2014, November 8, 2012, http://www.reuters.com/article/2012/11/08/idUS136757+08-Nov-2012+HUG20121108 (last accessed December 17, 2012).

51. CNN Money, Ringtones Requiem, January 18, 2010,

http://tech.fortune.cnn.com/2010/01/18/ringtones-requiem/ (last accessed December 17, 2012).

52. Digital Music News, Ringtones Are Still Four Times Bigger Than Spotify, Rhapsody, & Pandora,
Combined..., November 1, 2012, http://www.digitalmusicnews.com/permalink/2012/121101ringtones(last accessed December 17, 2012).

53. Hypebot, iTunes Dominates Music Sales, While Pandoras Footprint Soars,

http://www.hypebot.com/hypebot/2012/09/itunes-dominates-music-sales-while-pandorasfootprint-soars-study.html (last accessed December 17, 2012).

54. Media Buyer Planner, Online Radio: Weekly Audience Jumps More Than 30%, Boosted By Smart
Phones, April 11, 2012, http://www.mediabuyerplanner.com/entry/110008/online-radio-weeklyaudience-jumps-more-than-30-boosted-by-smart-phones/ (last accessed December 17, 2012).

55. Gotta Be Mobile, Ringtones Still a $2 Billion a Year Business,! Heres Why,, November 13, 2011,
http://www.gottabemobile.com/2011/11/13/ringtones-still-a-2-billion-a-year-business-heres-why/ (last accessed December 17, 2012).

56. Mac Life, How to Quickly Make a Ringtone in iTunes, July 10, 2012,

http://www.maclife.com/article/howtos/how_quickly_make_ringtone_itunes (last accessed December 17, 2012).

57. Apple, iTunes Preview: Ringtones Onlone, https://itunes.apple.com/us/app/ringtonesonline/id524088282?mt=8 (last accessed December 17, 2012).

58. USA Today, Survey: Smartphone, Tablet Usage Still on Rise, July 31, 2012,
http://content.usatoday.com/communities/technologylive/post/2012/07/survey-smartphone-andtablet-usage-continues-to-rise/1#.UMS03aU6KlK (last accessed December 17, 2012).

59. The Register, The billion Dollar Ringtones War, January 8, 2007,
http://www.theregister.co.uk/2007/01/08/steve_gordon_ringtones/ (last accessed December 17, 2012).

60. The Atlantic, Death of a Ringtone: The Rise and Fall of Nokia, July 16, 2012,
http://www.theatlantic.com/business/archive/2012/06/death-of-a-ringtone-the-rise-and-fall-ofnokia/258562/ (last accessed December 13, 2012).

61. Bloomberg BusinessWeek, Rudetones: ringtones Are Getting Rude, June 24, 2005,
http://www.businessweek.com/the_thread/techbeat/archives/2005/06/rudetones_ringt.html (last accessed December 17, 2012).

62. iStockAnalyst, Vringo (VRNG) Awarded $30M in Google Patent-Infringement Suit, November 6,
2012, http://www.businessinsider.com/vringo-patent-lawsuit-2012-11 (last accessed December 13, 2012).

CASES 63. In re Cellco Partnership, 663 F. Supp. 2d 363 (S.D. N.Y. 2009). UNITED STATES CODE 64. 17 U.S.C.A. 110 (West).

TABLE OF FIGURES
65. Figure 1: Bell System Practices, C Type Ringers, http://bellsystempractices.org/500-/501-/501250-303-i04_1978-09-01.pdf (last accessed December 17, 2012).

66. Figure 2: Monophonic Transcriptions, Wikibooks,

http://en.wikibooks.org/wiki/IB_Music/Introduction (last accessed December 9, 2012).

67. Figure 3: Ringtone Sent via SMS, Rediff Mobile, http://in.rediff.com/mobile/faqmr.htm (last
accessed December 9, 2012).

68. Figure 4: Polyphonic Transcriptions, Matti Rryynanen,

http://www.cs.tut.fi/sgn/arg/matti/demos/melofrompoly/ (last accessed December 9, 2012).

69. Figure 5: Methods for generating music using a transmitted/received music data file, Alaine
Georges et. al., Medialab Solutions, United States Patent No. 8,247,676 (August 21, 2012).

70. Figure 6: Polyphonic Ringtone Annunciatior With Spectrum Modification, Nevil Hunt,

Matsushita Electric Industrial Co., LTD., United States Patent Application No. 11/912,363 (Nov. 22, 2006).

71. Figure 7: Dynamically Generated Ring Tones, Michael Neuman, Brian K. McKnight, Apple Inc.,
United States Patent Application No. 12/549,323 (Aug. 27, 2009).

72. Figure 8: Haptic Communication, Zoran Radivojevic et. al., Nokia Corporation, United States
Patent Application No. 13/231,697 (Sept. 13, 2011).

73. Figure 9: Ringback Advertising, Ronald Ho, Jennifer W. Lin, Google Inc., United States Patent
No. 8,135,613 (March 13, 2012).

74. Figure 10: Apple Inc. Revenue by Category http://www.macrumors.com/2012/01/24/applereports-best-quarter-ever-in-q1-2012-13-06-billion-profit-on-46-33-billion-in-revenue/ (last accessed December 17, 2012).

75. Figure 11: Contact Matching of Changing Content Across Platforms, Mazor et. al., United States
Patent Application No. 12/367,525 (Feb, 8 2009).

76. Figure 12: Percentage of Internet Users Listening to Internet Radio,

http://www.mediabuyerplanner.com/entry/110008/online-radio-weekly-audience-jumps-morethan-30-boosted-by-smart-phones/ (last accessed December 17, 2012).

77. Figure 13: Screenshot of iPhone Ringtone Creator, https://itunes.apple.com/us/app/ringtonesonline/id524088282?mt=8 (last accessed December 17, 2012).

78. Figure 14: Chart of Smart Phone vs. Non-Smart Phone Users,

http://www.gottabemobile.com/2011/11/13/ringtones-still-a-2-billion-a-year-business-heres-why/ (last accessed December 17, 2012).

EXECUTIVE SUMMARY
The Traditional ringtone has run its course. It will never look the same again...1 Jonathan Medved, CEO of Vringo

This paper seeks to analyze the development and commercialization of ringtone technologies. Since the beginning, phones have always needed an alert system to let a user know someone was trying to contact them. In a very short period of time this technology evolved from a spring operated gong physically ringing a bell, to a customizable video showing the individual on the other end. While this latter technology may seem remarkable, evidence suggests it too may soon seem primitive. This paper will begin by discussing the initial breakthroughs in ringtone technologies, specifically with mobile phones. It will detail the specific technologies and the companies whose genius turned the technology into once the highest grossing form of digital media. Also significant, this paper will describe the ringtone technologys fall from grace; away from digital dominance into a fading technological fad. Next, the paper will discuss the efforts of companies to revive the technology and transform it to a modern market. As mobile phone capabilities increase, more and more avenues for ringtone innovation reveal themselves. It should come as no surprise then, companies whom have seen the market for ringtone technologies flourish in the past continue to develop technologies to ensure they will be there when they undoubtedly do so again in the future. Additionally, this paper will describe the unique challenges ringtone commercialization has presented in the legal field. With the evolution and increased popularity of ringtone technologies, countless different parties fought to claim a portion of the profits. Who is entitled to how much is a debate that continues to swirl, with each answer growing stale as ringtone technologies evolve. Finally, this paper will conclude by offering advice to companies already in the market seeking to maintain a competitive advantage, as well as those seeking to enter the market. Ringtones have run the gamut from becoming the most popular form of digital
1

Vringo, Vringo Provides Update on Mobile Patent Portfolio, August 25, 2011, http://ir.vringo.com/phoenix.zhtml?c=235370&p=irol-newsArticle_Print&ID=1600315&highlight= (last accessed December 9, 2012).

media consumption, to fading from mainstream consideration. Needless to say, there have been many lessons to be learned along the way.

INTRODUCTION
Ringtones operate to alert an individual that someone is trying to contact him or her via telephone. Although this is seemingly a basic function, companies have been able to manipulate this forum for substantial profits. As mobile phones became increasingly popular, companies like Nokia and Motorola developed ways to personalize their cell phone products using ringtone technologies. With this personalization ringtones took on a number of functions beyond simply alerting a user to an incoming call. Ringtones became an indication of a persons individuality, a way to display characteristics about ones self to anyone within audible range.2 With nearly 6 billion mobile phone subscribers worldwide,3 there is plenty of opportunity for commercialization of ringtone technologies. In its brief history, ringtone technology has transformed from single-tone melodies to full on song alerts, and from full on songs to dual audio and video displays. The increasing popularity of smart phones with seemingly endless capabilities has allowed companies to continue to introduce new iterations of the same basic alert function. Although this has created massive competition and litigation in this arena, the progression has been mostly healthy in that it has encouraged endless innovation in the field. Ringtones havent been the indicators of cool that they once were for some time now, but the basic function a ringtone serves will seemingly never fade. As long as people use phones, the market for ringtones will continue to exist. Manipulation of this market requires innovation to change consumer mindset, making this basic function worthy of a couple of extra bucks. Although the field is currently full of giant tech companies all out for the same consumers, none have recently presented this requisite innovation in a palpable way to consumers. This suggests there is still room for a

Forbes, What Does Youre your Ringtone Say About You? , June 1, 2005, http://www.forbes.com/2005/06/01/cx_de_0601ringtone.html (last accessed December 17, 2012). 3 MobiThinking, Global mobile statistics 2012 Part A: Mobile subscribers; handset market share; mobile operators, December, 2010, http://mobithinking.com/mobile-marketing-tools/latest-mobilestats/a#subscribers (last accessed December 17, 2012).

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company to enter the ringtone technology market. If one should enter and introduce such an innovation, there would certainly be no shortage of potential customers.

TECHNOLOGY
This section will discuss the evolution of ringtone technologies from the advent of the telephone to today. It will discuss the way ringtone technologies have progressed parallel to mobile phone technologies, and discuss the players involved in developing these technologies.

The Short History and Vast Development of Ringtone Technologies

Development of the first telephone technology came in the 1870s with the invention of the harmonic telegraph.4 One hundred or so years later, AT&T developed the first distinctive tones to help the hearing impaired determine which phone, if near many, was ringing.5 This technology allowed the telephone user to adjust the position at which a bell would be tapped, thus changing the tone an incoming call would create.6 Figure 1. C Type Ringer.7

AT&T, Inventing the Telephone, http://www.corp.att.com/history/inventing.html (last accessed December 9, 2012). 5 AT&T, Western Electric Ringers, http://www.porticus.org/bell/telephones-technical-ringers.html (last accessed December 9, 2012). 6 AT&T, Western Electric Ringers, http://www.porticus.org/bell/telephones-technical-ringers.html (last accessed December 9, 2012). 7 Bell System Practices, C Type Ringers, http://bellsystempractices.org/500-/501-/501-250-303i04_1978-09-01.pdf (last accessed December 17, 2012).

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As telephone technology advanced to the point where mobile devices were common place, so too did ringtone technology. In the 1990s, mobile ringtones entered the market as monophonic tones, reducing the songs from which they derived to single note sounds played in succession.8 These tones would commonly come pre-loaded onto a users cell phone, and the user could then switch between the tones as he or she desired.9 Figure 2. Illustration of Monophonic Transcriptions.10

In the late 1990s, a Finnish programmer named Vesa-Matti Paananen developed software he called Harmonium that would dramatically and inadvertently advance the ringtone market.11 Harmonium was a program that allowed users to write code to program their cell phones to make musically complex sequences, and then send those sequences via a short message system, like text messaging to their phones for continued use.12 These sequences, at this time monophonic only, could then be downloaded and set as the users ringtone.13 Whether Paananen didnt realize his programs potential or simply felt generous is unclear, but in 1997 Paananen made Harmonium available for free to download as an open source program on the Linux operating system.14 A substantial market for ringtones became apparent when one book describing how to make
8

Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 9 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 10 Wikibooks, http://en.wikibooks.org/wiki/IB_Music/Introduction (last accessed December 9, 2012). 11 The New Yorker, Ring My Bell: The Expensive Pleasures of the Ringtone , March 7, 2005, http://www.newyorker.com/archive/2005/03/07/050307crmu_music?currentPage=1 (last accessed December 9, 2012). 12 The New Yorker, Ring My Bell: The Expensive Pleasures of the Ringtone , March 7, 2005, http://www.newyorker.com/archive/2005/03/07/050307crmu_music?currentPage=1 (last accessed December 9, 2012). 13 Detecon, The Digital Entertainment Evolution, http://www.detecon-dmr.com/en/article/the-evolution-ofdigital-entertainment_2007_10_31/page/4 (last accessed December 9, 2012). 14 The New Yorker, Ring My Bell: The Expensive Pleasures of the Ringtone, March 7, 2005, http://www.newyorker.com/archive/2005/03/07/050307crmu_music?currentPage=1 (last accessed December 9, 2012).

12

monophonic versions of popular songs with a Harmonium-like system sold over 3 million copies.15 Figure 3. Ringtone Sent via Short Message System.16

Working from this system, companies called aggregators, who distribute digital content, developed the system further.17 Although the technology was the same at its core, these aggregators developed a way for polyphonic ringtones to be sent to cell phones, allowing for multiple notes to be played at the same time.18 In 2002, Nokia introduced its 3150-model phone, the first to introduce polyphonic ringtones to cell phone subscribers.19 These more complex polyphonic tones allowed cell phone providers, such as Nokia, to introduce greater quality ringtones, thus increasing their popularity with mobile subscribers.20

Figure 4. Polyphonic Transcriptions.21

15

Techsplosive, Evolution of the Rington: From Monophonic to Quality MP3s, June 2, 2012, http://www.techsplosive.com/category/innovation/ (last accessed December 9, 2012). 16 Rediff Mobile, http://in.rediff.com/mobile/faqmr.htm (last accessed December 9, 2012). 17 The New Yorker, Ring My Bell: The Expensive Pleasures of the Ringtone , March 7, 2005, http://www.newyorker.com/archive/2005/03/07/050307crmu_music?currentPage=1 (last accessed December 9, 2012). 18 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 19 Top Ten Reviews, Ringtones Then and Now, http://ringtone-softwarereview.toptenreviews.com/ringtones-then-and-now.html (last accessed December 9, 2012). 20 Wise GEEK, What is a Polyphonic Ringtone?, http://www.wisegeek.com/what-is-a-polyphonicringtone.htm (last accessed December 9, 2012). 21 Matti Rryynanen, http://www.cs.tut.fi/sgn/arg/matti/demos/melofrompoly/ (last accessed December 9, 2012).

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Advances in the technology would not stop there. In 2004, cell phone technology began to advance to the point where phones could store and play MP3 or AAC files containing full songs, the same kind of music files commonly used on computers.22 Around this same time, cell phone providers began to notice a decline in polyphonic ringtone sales, coinciding with a rise in the sales of these full song MP3s.23 Providers took this to mean consumers were no longer satisfied with the stripped down renditions of their favorite songs, desiring instead full songs to alert them to a call or message.24 As a response, developers introduced ringtones that played full excerpts from a sound recording, rather than a derivative version.25 These ringtones, called mastertones were typically in the form of a clip of a larger sound recording, such as the hook to a popular song.26 Although the ringtone market saw its greatest success during the mastertones era, developments in the technology still persist today. Many phones today allow a user to download third party applications to add to his or her phones functionality.27 Developers have attempted to re-popularize the ringtone by introducing applications that allow users

22

Carmen Kate Yuen, Scuffling for A Slice of the Ringtone Pie: Evaluating Legal and Business Approaches to Copyright Clearance Issues, 8 Vand. J. Ent. & Tech. L. 541, 542 (2006). 23 USA Today, Mastertones Ring Up Profits, November 29, 2006, http://usatoday30.usatoday.com/life/music/news/2006-11-28-mastertones-main_x.htm (last accessed December 9, 2012). 24 USA Today, Mastertones Ring Up Profits, November 29, 2006, http://usatoday30.usatoday.com/life/music/news/2006-11-28-mastertones-main_x.htm (last accessed December 9, 2012). 25 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 26 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 27 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006).

14

to download video ringtones,28 which play a video when the user receives a call or message, or simply upload their own audio so as not to have to purchase each song from the cell phone provider.29 While these recent developments have not reached the success that mastertones had, recent patent applications indicate the best is yet to come.

INTELLECTUAL PROPERTY
This section will detail some developments to ringtone technologies that are currently available in the market, as well as discuss patents and pending patent applications tending to show ringtone technologies continue to develop today.

Current Intellectual Property

In 1997, Seer Systems, working with Intel, developed the worlds first commercial software synthesizer.30 This system allowed users to create polyphonic tunes at their computer, rather than requiring a stand-alone keyboard.31 Shortly after, Seer Systems patented a method for storing and sending these tunes via the Internet, the 676 patent.32 Though they probably didnt anticipate it at the time, this technology would become commonplace in computers, requiring companies like Microsoft, Yamaha, and Beatnik all to take licenses.33 As recently as 2009, the Electronic Frontier Foundation, a digital rights defense group, were granted a reexamination of the patent on the basis of Seer Systems alleged failure to submit significant descriptions of the technology to the patent office.34 Although reexaminations are affirmed roughly 70% of the time, Seer

28

Hongkiat, Custom Video as Ringtone For Incoming Calls on Android, http://www.hongkiat.com/blog/video-ringtone-android/ (last accessed December 9, 2012). 29 AppStorm, 10 Gorgeous iPhone Apps for Making Your Own Ringtones , March 22, 2011, http://iphone.appstorm.net/roundups/music-roundups/10-gorgeous-iphone-apps-for-making-your-ownringtones/ (last accessed December 9, 2012). 30 Seer Systems, About Seer Systems, http://seersystems.com/about-2/ (last accessed December 9, 2012). 31 Seer Systems, About Seer Systems, http://seersystems.com/about-2/ (last accessed December 9, 2012). 32 Methods for generating music using a transmitted/received music data file, Alaine Georges et. al., Medialab Solutions, United States Patent No. 8,247,676 (August 21, 2012). 33 The Register, EFF Wins Request for Reexamination of Ringtone Patent, http://www.theregister.co.uk/2009/01/07/eff_challenges_music_patent/ (last accessed December 9, 2012). 34 The Register, EFF Wins Request for Reexamination of Ringtone Patent, http://www.theregister.co.uk/2009/01/07/eff_challenges_music_patent/ (last accessed December 9, 2012).

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systems has been able to withstand the challenge, and the patent is still valid and licensed by many today.35 Figure 5. Seer Systems Patent 8,247,676 Showing Method for Transferring MIDI Files.36

In 2006, Matsushita Industrial Electric Company, now Panasonic, introduced a minor modification to traditional ringtone technology that would become commonplace in cellular devices. Polyphonic Ringtone Annunciator With Spectrum Modification, the 363 patent, is a system designed to improve the ability of a ringtone to alert a cell phone user of an incoming call or message.37 The technology does so by giving the appearance of increasing the ringtones volume after a predetermined period.38 By increasing the
35

Seer Systems, Seer Systems Vindicated, http://seersystems.com/2010/11/02/seer-systems-vindicated/ (last accessed December 9, 2012). 36 Methods for generating music using a transmitted/received music data file, Alaine Georges et. al., Medialab Solutions, United States Patent No. 8,247,676 (August 21, 2012). 37 Polyphonic Ringtone Annunciatior With Spectrum Modification, Nevil Hunt, Matsushita Electric Industrial Co., LTD., United States Patent Application No. 11/912,363 (Nov. 22, 2006). 38 Polyphonic Ringtone Annunciatior With Spectrum Modification, Nevil Hunt, Matsushita Electric Industrial Co., LTD., United States Patent Application No. 11/912,363 (Nov. 22, 2006).

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frequencies with the highest amplitudes, the ringtone appears to be ringing louder but is actually simultaneously dulling the softer frequencies, resulting in a more noticeable ring while using the same amount of battery power.39 Simply stated, its purpose is to make a ringtone more audible.40 Figure 6. Matsushita Patent Application 11/912,363 Showing Frequency Interval Increases.41

Future Intellectual Property

Ringtone technology has come a long way. Like the digital media landscape around it, ringtone technology has been in a state of constant evolution since its popularization in the 1990s. While market analysis of traditional ringtone technologies, discussed further below, would indicate ringtones are a dying technological fad, new patent applications suggest ringtone technology has yet to see its most innovative developments come to market. One innovation to ringtone technology has been to incorporate videos into ringtones. Current iterations of video ringtone technologies allow a user to set a single video to play to alert the user of an incoming call or message.42 Similar to the first monophonic ringtones, these video ringtones are limited to one set of images playing
39

Polyphonic Ringtone Annunciatior With Spectrum Modification, Nevil Hunt, Matsushita Electric Industrial Co., LTD., United States Patent Application No. 11/912,363 (Nov. 22, 2006). 40 Polyphonic Ringtone Annunciatior With Spectrum Modification, Nevil Hunt, Matsushita Electric Industrial Co., LTD., United States Patent Application No. 11/912,363 (Nov. 22, 2006). 41 Polyphonic Ringtone Annunciatior With Spectrum Modification, Nevil Hunt, Matsushita Electric Industrial Co., LTD., United States Patent Application No. 11/912,363 (Nov. 22, 2006). 42 TUAW, Apple Working on Video Ringtones, http://www.tuaw.com/2011/03/07/apple-working-on-videoringtones/ (last accessed December 9, 2012).

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every time a call comes in from a specified contact.43 While a number of companies have offered variations of this service, none are as extensive as the system Apple has recently attempted to patent. Apples Dynamically Generated Ring Tones patent, the 323 patent, describes a complex video ringtone system that creates a layered composite from multiple video sources that interacts with the concurrent audio alert to display a video based on the characteristics of the audio track.44 Additionally, this system is designed to allow for personalization using other Apple technology such as iTunes and iMovie, as well as allowing one cell phone user to send his or her personalized video ringtone to another user simply by calling the other user.45 One benefit to this seems to be to spread the word about particular songs, which could then be purchased through Apples digital music marketplace iTunes.46 This patent also describes a system of random video alerts, suggesting the technology could create a new forum for advertisement.47 3D video capability, and website linking technology is also described by the patent.48 Though many of the technologies described here may never make it to market, Apples patent indicates a continuing effort to capitalize on a once dominant digital media market. Figure 7. Apple Patent Application 12/549,323 Showing Layered Signals for Video Playback.49

43

TUAW, Apple Working on Video Ringtones, http://www.tuaw.com/2011/03/07/apple-working-on-videoringtones/ (last accessed December 9, 2012). 44 Into Mobile, Apple Working on iOS Video Ringtones?, http://www.intomobile.com/2011/03/08/appleworking-ios-video-ringtones/ (last accessed December 9, 2012). 45 Patently Apple, Apple Deams Up Some Cool Video Ringtones for the iPhone, http://www.patentlyapple.com/patently-apple/2011/03/apple-dreams-up-some-cool-video-ringtones-forthe-iphone.html (last accessed December 9, 2012). 46 Patently Apple, Apple Deams Up Some Cool Video Ringtones for the iPhone, http://www.patentlyapple.com/patently-apple/2011/03/apple-dreams-up-some-cool-video-ringtones-forthe-iphone.html (last accessed December 9, 2012). 47 Patently Apple, Apple Deams Up Some Cool Video Ringtones for the iPhone, http://www.patentlyapple.com/patently-apple/2011/03/apple-dreams-up-some-cool-video-ringtones-forthe-iphone.html (last accessed December 9, 2012). 48 Dynamically Generated Ring Tones, Michael Neuman, Brian K. McKnight, Apple Inc., United States Patent Application No. 12/549,323 (Aug. 27, 2009). 49 Dynamically Generated Ring Tones, Michael Neuman, Brian K. McKnight, Apple Inc., United States Patent Application No. 12/549,323 (Aug. 27, 2009).

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Nokia, the company who created the first cell phone with polyphonic ringtone capabilities, remains creative in its ringtone technologies. Its latest ringtone related patent application, the 697 patent, describes a method for making magnetic tattoos that would vibrate under a cell phone users skin to alert him or her to a call or message.50 Like classic ringtones, these haptic communications could be set to emit different vibration patterns, making them customizable by the user.51 Consumers may not be able to get past the potential health implications such invasive technology could bring,52 but its commercialization would represent yet another revolution in ringtone technology.

Figure 8. Nokia Patent Application 13/231,697 Showing Vibrating Magnetic Tattoo.53

50

Haptic Communication, Zoran Radivojevic et. al., Nokia Corporation, United States Patent Application No. 13/231,697 (Sept. 13, 2011). 51 Huff Post Tech, Vibrating Tattoo Patented By Nokia Alerts Users When Phone Rings, March 21, 2012, http://www.huffingtonpost.com/2012/03/21/vibrating-tattoo-nokia-patent-phone-ringing_n_1369978.html (last accessed December 9, 2012). 52 Information Week, Nokias Vibrating Tattoo: A Bad Buzz, March 21, 2012, http://www.informationweek.com/personal-tech/wireless/nokias-vibrating-tattoo-a-bad-buzz/232602931 (last accessed December 9, 2012). 53 Haptic Communication, Zoran Radivojevic et. al., Nokia Corporation, United States Patent Application No. 13/231,697 (Sept. 13, 2011).

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Ringback tones are songs that play while a caller waits for the user on the receiving end of the call to answer, similar to hold music. These tones reached the height of their popularity with consumers in 2007, but like ringtones, have since faded.54 Google, a tech company with its own line of phones, has recently applied for a patent that would bring paid advertisements to ringback tones.55 Using GPS data from a callers phone, Googles system would allow for particularized location-based advertising.56 Additionally, the system would work with the information Google already gathers about its users online to further particularize the advertisement by each users interests.57 Figure 9. Google Patent 8,135,613 Showing a System for Ringback Advertising.58

54

Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 55 Unwired View, Google to Monetize Voice Via Ringback Advertising Auctions?, July 9, 2012, http://www.unwiredview.com/2009/07/16/google-to-monetize-voice-via-ringback-advertising-auctions/ (last accessed December 9, 2012). 56 Unwired View, Google to Monetize Voice Via Ringback Advertising Auctions?, July 9, 2012, http://www.unwiredview.com/2009/07/16/google-to-monetize-voice-via-ringback-advertising-auctions/ (last accessed December 9, 2012). 57 Unwired View, Google to Monetize Voice Via Ringback Advertising Auctions?, July 9, 2012, http://www.unwiredview.com/2009/07/16/google-to-monetize-voice-via-ringback-advertising-auctions/ (last accessed December 9, 2012). 58 Ringback Advertising, Ronald Ho, Jennifer W. Lin, Google Inc., United States Patent No. 8,135,613 (March 13, 2012).

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MARKET AND COMPETING TECHNOLOGIES

This section discusses the market for ringtone technologies and highlights some of the most prominent companies currently operating in the field. Additionally this section will describe how the market for ringtone technologies has transformed with the increasing popularity of smart phones.

Market and Market Leaders

Cell phones have become commonplace among telephone users, in many cases eliminating the need for landline phones. By 2006, there were more than 1.5 billion mobile phone subscribers worldwide.59 In 2007 nearly fifty percent of cell phone users in the U.S. had purchased at least one ringtone.60 Despite in most cases only being a small part of a larger sound recording, and sometimes triple the price, ringtones would eventually beat out MP3s to become the largest profit producer for the recording

59

Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 60 Jennifer Mariano Porter, Compulsory Licensing and Cell Phone Ringtones: The Phone Is Ringing, A Court Needs to Answer, 80 Temp. L. Rev. 907, 929 (2007).

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industry.61 At its height, the ringtone market would report nearly 7 billion dollars in sales worldwide in a single year.62 Jamster!, a mobile phone content provider, was among the first companies to offer a subscription ringtone service to cell phone users.63 Previously called Jamba!, Jamster! was made popular worldwide due to its Crazy Frog character.64 Crazy Frog was a ringtone character whose ringtone-only songs became so popular they began being played on the radio, even reaching the top of the charts in some countries.65 When a user would download a Jamster! ringtone, such as a Crazy Frog song, the user would automatically be subscribed to receive ringtone credits at a premium-monthly rate.66 Though popularized by Crazy Frog, the company would soon get top-ten artist endorsements for its ringtones, and eventually expand to provide graphics and games.67 Jamster! was purchased by VeriSign in 2004 for $270 million dollars, and by 2006 Crazy Frog ringtones alone brought in $500 million.68 Subsequent purchases of controlling interests in Jamster! make it difficult to determine what stake it holds in the ringtone market today. In 2006, News Corp. purchased a controlling share in Jamster! and merged

61

Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 62 Grab Stats, Detailed Information About Ringtone Downlads, http://www.grabstats.com/statmain.aspx?StatID=104 (last accessed December 17, 2012). 63 PR NewsWire, Jamster! Brings European Mobile Phenomenon Crazy Frog to America, http://www.prnewswire.com/news-releases/jamster-brings-european-mobile-phone-phenomenon-crazyfrog-to-america-54772012.html (last accessed December 17, 2012). 64 PR NewsWire, Jamster! Brings European Mobile Phenomenon Crazy Frog to America, http://www.prnewswire.com/news-releases/jamster-brings-european-mobile-phone-phenomenon-crazyfrog-to-america-54772012.html (last accessed December 17, 2012). 65 PR NewsWire, Jamster! Brings European Mobile Phenomenon Crazy Frog to America, http://www.prnewswire.com/news-releases/jamster-brings-european-mobile-phone-phenomenon-crazyfrog-to-america-54772012.html (last accessed December 17, 2012). 66 JESTA Digital , About Us, http://www.jamster.com/corp/about-us/products/prices/ (last accessed December 17, 2012). 67 PR NewsWire, Jamster! Brings European Mobile Phenomenon Crazy Frog to America, http://www.prnewswire.com/news-releases/jamster-brings-european-mobile-phone-phenomenon-crazyfrog-to-america-54772012.html (last accessed December 17, 2012). 68 CAFA Law Blog, CAFA Meets Jamster: Kill the Crazy Frog, February 22, 2010, http://www.cafalawblog.com/-case-summaries-cafa-meets-jamster-kill-the-crazy-frog.html (last accessed December 17, 2012).

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the company with Fox Mobile Group.69 Jesta Group, a private company, later purchased Fox Mobile Group in December of 2010 for an undisclosed amount.70 Apple, a multi-billion dollar tech company, currently holds 32% of the smartphone market with its iPhone product.71 Used in conjunction with iTunes, its digital media market, Apple allows users to purchase ringtones from iTunes for use on its iPhone.72 Although its unclear how much revenue Apple has earned from ringtones alone, its iTunes digital media market brought in quarterly revenue of $1.7 billion in the first quarter of 2012 alone.73 With such a large share of the smartphone and digital media markets, as well as its aforementioned interest in ringtone technologies, Apple should be considered one of the most powerful companies with a stake in the ringtone market. Figure 10. Apple Inc. Revenue by Category.74

69

Cnet, News Corp. Takes Majority Stake in Jamba, September 12, 2006, http://news.cnet.com/NewsCorp.-takes-majority-stake-in-Jamba/2100-1027_3-6114809.html (last accessed December 17, 2012). 70 PR NewsWire, Jamster! Brings European Mobile Phenomenon Crazy Frog to America, http://www.prnewswire.com/news-releases/jamster-brings-european-mobile-phone-phenomenon-crazyfrog-to-america-54772012.html (last accessed December 17, 2012). 71 Mac Most, Apple Quarterly Results Show Soaring Priofits, April 21, 2011, http://macmost.com/applequarterly-results-show-soaring-profits.html (last accessed December 17, 2012). 72 Apple, Buying iPhone Ringtones, http://www.apple.com/findouthow/music/itunes.html#storebuyingiphoneringtones (last accessed December 17, 2012). 73 Mac Rumors, Apple Reports Best Quarter Ever, January 24, 2011, http://www.macrumors.com/2012/01/24/apple-reports-best-quarter-ever-in-q1-2012-13-06-billion-profiton-46-33-billion-in-revenue/ (last accessed December 17, 2012). 74 Mac Rumors, Apple Reports Best Quarter Ever, January 24, 2011, http://www.macrumors.com/2012/01/24/apple-reports-best-quarter-ever-in-q1-2012-13-06-billion-profiton-46-33-billion-in-revenue/ (last accessed December 17, 2012).

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Vringo is an Israeli startup company originally specializing in video ringtone technology.75 Its online services seek to integrate video ringtones with social networking in order to revive a once thriving ringtone market.76 In addition to its original services, Vringo holds an ever-increasing patent profile with over 500 patents and patent applications.77 In 2012, Vringo purchased $22 million of patents from Nokia, patents which Nokia claimed were essential to current wireless communication standards.78 Vringo is poised to become a big time player in the ringtone market, with some projecting a market cap of $1 billion in the near future.79 Figure 11. Vringo Patent Showing Social Media Integration in Video Ringtones.80

75

Bloomberg, Vringo Ringtone Startup From Israel Vies With News Corp. Unit, December 17, 2009, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ay4CsC8itZ_w (last accessed December 17, 2012). 76 Bloomberg, Vringo Ringtone Startup From Israel Vies With News Corp. Unit, December 17, 2009, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ay4CsC8itZ_w (last accessed December 17, 2012). 77 Daily Finance, Buy, Sell or Hold: Vringo, December 8, 2012, http://www.dailyfinance.com/2012/12/08/buy-sell-or-hold-vringo/ (last accessed December 17, 2012). 78 The Next Web, Mobile Tech Firm Vringo to Sell $31.3m Worth of Stock to Buy over 500 Nokia Patents for (at least) $22m, August 9, 2012, http://thenextweb.com/insider/2012/08/09/mobile-tech-firm-vringo-tosell-31-2m-worth-of-stock-to-buy-ip-from-nokia-and-more/ (last accessed December 17, 2012). 79 Reuters, Closer Look: Vringo Now Stands to Earn Over $600 Million in High-Margin Royalty Revenues Through 2014, November 8, 2012, http://www.reuters.com/article/2012/11/08/idUS136757+08-Nov2012+HUG20121108 (last accessed December 17, 2012). 80 Contact Matching of Changing Content Across Platforms, Mazor et. al., United States Patent Application No. 12/367,525 (Feb, 8 2009).

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Competing Technologies: Smart Phones Changed Everything

There is no substitute for the ringtone. A cell phone user may choose to set his or her phone to silent, or to vibrate only, but to this point there is no other way to alert the user to an incoming message or call than the phone making a sound. Some posit, however, as the popularity of text messaging has increased, the occasion for the phone to ring has decreased, resulting in a waning enthusiasm for personalized ringtones.81 Perhaps a better explanation, however, is that in recent years technological advances in cell phones have operated to reduce the popularity of ringtones by putting multiple mediums of digital music consumption into the hands of smart phone users everywhere. One example may be the introduction of subscription streaming and Internet radio. In 2012, 50% of all Internet users were aware of Pandora, a free Internet radio service, and half of those individuals used the service.83 Of those individuals who purchase MP3s, a more permanent music file that allows a user to repeat tracks at any time, 64% still used Internet radio services.84 Additionally, the rapidly increasing rate of Internet radio listeners has been directly linked to the increase in smart phone usage.85 It should follow then, as consumers enjoy greater access to free digital songs, the desire to pay a high price for a short audio clip would decrease.
82

Figure 12. Percentage of Internet Users Listening to Internet Radio 86

81

CNN Money, Ringtones Requiem, January 18, 2010, http://tech.fortune.cnn.com/2010/01/18/ringtonesrequiem/ (last accessed December 17, 2012). 82 Digital Music News, Ringtones Are Still Four Times Bigger Than Spotify, Rhapsody, & Pandora, Combined..., November 1, 2012, http://www.digitalmusicnews.com/permalink/2012/121101ringtones (last accessed December 17, 2012). 83 Hypebot, iTunes Dominates Music Sales, While Pandoras Footprint Soars, http://www.hypebot.com/hypebot/2012/09/itunes-dominates-music-sales-while-pandoras-footprint-soarsstudy.html (last accessed December 17, 2012). 84 Hypebot, iTunes Dominates Music Sales, While Pandoras Footprint Soars, http://www.hypebot.com/hypebot/2012/09/itunes-dominates-music-sales-while-pandoras-footprint-soarsstudy.html (last accessed December 17, 2012). 85 Media Buyer Planner, Online Radio: Weekly Audience Jumps More Than 30%, Boosted By Smart Phones, April 11, 2012, http://www.mediabuyerplanner.com/entry/110008/online-radio-weekly-audiencejumps-more-than-30-boosted-by-smart-phones/ (last accessed December 17, 2012). 86 Media Buyer Planner, Online Radio: Weekly Audience Jumps More Than 30%, Boosted By Smart Phones, April 11, 2012, http://www.mediabuyerplanner.com/entry/110008/online-radio-weekly-audiencejumps-more-than-30-boosted-by-smart-phones/ (last accessed December 17, 2012).

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Further providing for the ringtones demise, smart phones now allow users to create their own ringtones from already purchased MP3 files.87 Apples iTunes, the largest music retailer in the world,88 allows a user to create a ringtone either on his or her computer or using their smart phone.89 This allows a user to not only make any MP3 file into a ringtone, the user can also customize exactly which part of the audio clip he or she would like to set as the ringtone.90 With this level of customization, and a free price tag, smart phone users are less likely to pay ringtone providers for far more limited content.

Figure 13. Screenshot of iPhone Ringtone Creator91

87

Gotta Be Mobile, Ringtones Still a $2 Billion a Year Business,! Heres Why, , November 13, 2011, http://www.gottabemobile.com/2011/11/13/ringtones-still-a-2-billion-a-year-business-heres-why/ (last accessed December 17, 2012). 88 Willow Noonan, Antitrust, Intellectual Property, and the Itunes Ecosystem: A Study of the Antitrust Implications of Apple's Fairplay Technology with A Nod to the Peculiarities of Intellectual Property , 50 IDEA 533 (2010). 89 Apple, Buying iPhone Ringtones, http://www.apple.com/findouthow/music/itunes.html#storebuyingiphoneringtones (last accessed December 17, 2012). 90 Mac Life, How to Quickly Make a Ringtone in iTunes, July 10, 2012, http://www.maclife.com/article/howtos/how_quickly_make_ringtone_itunes (last accessed December 17, 2012). 91 Apple, iTunes Preview: Ringtones Online, https://itunes.apple.com/us/app/ringtonesonline/id524088282?mt=8 (last accessed December 17, 2012).

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Despite this, ringtones still represent a very large portion of the worlds digital music consumption.92 In 2011, ringtones reportedly earned over 2 billion dollars worldwide. In both Asia and Africa for example, ringtones remain extremely profitable.93 One reason for the continuing profitability of ringtones may be the fact that many cell phone subscribers still use phones that are not as technologically advanced as smart phones. These phones do not allow users to create and install their own ringtones with the same ease as smart phones.94 Users of non-smart phones seem unwilling to go through the steps to create their own ringtones, when the systems in place on those phones allow them to purchase ringtones with such ease.95 Additionally, the convenient option of billing ringtones to a users monthly bill maintains the ease with which ringtones can be
92

Digital Music News, Ringtones Are Still Four Times Bigger Than Spotify, Rhapsody, & Pandora, Combined..., November 1, 2012, http://www.digitalmusicnews.com/permalink/2012/121101ringtones (last accessed December 17, 2012). 93 Digital Music News, Ringtones Are Still Four Times Bigger Than Spotify, Rhapsody, & Pandora, Combined..., November 1, 2012, http://www.digitalmusicnews.com/permalink/2012/121101ringtones (last accessed December 17, 2012). 94 Gotta Be Mobile, Ringtones Still a $2 Billion a Year Business,! Heres Why, , November 13, 2011, http://www.gottabemobile.com/2011/11/13/ringtones-still-a-2-billion-a-year-business-heres-why/ (last accessed December 17, 2012). 95 Gotta Be Mobile, Ringtones Still a $2 Billion a Year Business,! Heres Why, , November 13, 2011, http://www.gottabemobile.com/2011/11/13/ringtones-still-a-2-billion-a-year-business-heres-why/ (last accessed December 17, 2012).

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purchased.96 Although smart phones are becoming increasingly popular,97 there are still many who use non-smart phones.98 Figure 14. Chart of Smart Phone vs. Non-Smart Phone Users99

LEGAL ISSUES
Sales of traditional music mediums, such as vinyl records and compact disks, have been in a state of decline almost every year since the year 2000.100 Although the introductions of newer digital formats are somewhat responsible, sales in these new

96

Gotta Be Mobile, Ringtones Still a $2 Billion a Year Business,! Heres Why, , November 13, 2011, http://www.gottabemobile.com/2011/11/13/ringtones-still-a-2-billion-a-year-business-heres-why/ (last accessed December 17, 2012). 97 USA Today, Survey: Smartphone, Tablet Usage Still on Rise, July 31, 2012, http://content.usatoday.com/communities/technologylive/post/2012/07/survey-smartphone-and-tabletusage-continues-to-rise/1#.UMS03aU6KlK (last accessed December 17, 2012). 98 Gotta Be Mobile, Ringtones Still a $2 Billion a Year Business,! Heres Why, , November 13, 2011, http://www.gottabemobile.com/2011/11/13/ringtones-still-a-2-billion-a-year-business-heres-why/ (last accessed December 17, 2012). 99 Gotta Be Mobile, Ringtones Still a $2 Billion a Year Business,! Heres Why, , November 13, 2011, http://www.gottabemobile.com/2011/11/13/ringtones-still-a-2-billion-a-year-business-heres-why/ (last accessed December 17, 2012). 100 The Register, The billion Dollar Ringtones War, January 8, 2007, http://www.theregister.co.uk/2007/01/08/steve_gordon_ringtones/ (last accessed December 17, 2012).

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formats have not made up for the decline in traditional revenues.101 As a response to this, the recording industry has welcomed any new revenue producing innovation, such as subscription streaming and cell phone ringtones, to pick up the slack.102 These technologies can be extremely profitable, but each new technology requires a different set of agreements between an increasingly complicated set of parties.103 Despite endless litigation, and the efforts of Congress, these parties may never come to an agreement as to how new media formats such as ringtones should be licensed.

Compulsory Licensing
In 1995 Congress enacted the Digital Performance Right in Sound Recordings Act, allowing a copyright holder the exclusive right to authorize others to perform [a sound recording] publicly by means of a digital audio transmission.104 Polyphonic ringtones are reproductions of a composition in Musical Instrument Digital Interface (MIDI) sound files.105 Since these files do not constitute a replay of the sound recording, rather a performance of a copyright-protected work, only the owner of the composition (typically the publisher), not record labels, would hold this exclusive right.106 In order to obtain permission from the publisher, then, ringtone providers and music publishers would have to come to an agreement as to the terms by which the publishers would relinquish some of this exclusive right.107 In the beginning, publishers were unwilling to grant licenses to ringtone providers.108 These publishers sought to wait and see how the market for ringtones

101

The Register, The billion Dollar Ringtones War, January 8, 2007, http://www.theregister.co.uk/2007/01/08/steve_gordon_ringtones/ (last accessed December 17, 2012). 102 The Register, The billion Dollar Ringtones War, January 8, 2007, http://www.theregister.co.uk/2007/01/08/steve_gordon_ringtones/ (last accessed December 17, 2012). 103 Jeffrey A. Wakolbinger, Compositions Are Being Sold for A Song: Proposed Legislation and New Licensing Opportunities Demonstrate the Unfairness of Compulsory Licensing to Owners of Musical Compositions, 2008 U. Ill. L. Rev. 803, 804 (2008). 104 17 U.S.C.A. 110 (West). 105 Jennifer Mariano Porter, Compulsory Licensing and Cell Phone Ringtones: The Phone Is Ringing, A Court Needs to Answer, 80 Temp. L. Rev. 907, 929 (2007). 106 Mario F. Gonzalez, Esq., Are Musical Compositions Subject to Compulsory Licensing for Ringtones?, 12 UCLA Ent. L. Rev. 11, 14 (2004). 107 Mario F. Gonzalez, Esq., Are Musical Compositions Subject to Compulsory Licensing for Ringtones? , 12 UCLA Ent. L. Rev. 11, 14 (2004). 108 Jennifer Mariano Porter, Compulsory Licensing and Cell Phone Ringtones: The Phone Is Ringing, A Court Needs to Answer, 80 Temp. L. Rev. 907, 929 (2007).

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would develop before coming to any agreements.109 Operating under fear of litigation by the publishers, ringtone providers were reluctant to push the technology forward.110 Despite this, ringtone providers eventually did sell ringtones without a license.111 Perhaps after determining the market was worthy, publishers began negotiating with providers to license the sound recordings.112 These voluntary licenses typically provided publishers with whichever was greater, ten percent of retail price of the ringtone, or ten cents.113 This ten percent agreement shortly thereafter became the industry standard.114 Despite this standard, 115 of the Copyright Act provides for much lower compulsory licensing rates for derivative works.115 The industry standard rates being paid to publishers were at least double the rate for compulsory licenses provided by the Act.116117 Providers reluctantly continued to license songs at the industry standard rate due to the immense paperwork burdens involved with invoking the compulsory licensing rates.118 However, if providers could license ringtones at the statutory rate, this substantial decrease in costs multiplied by the massive sales volume could result in a

109

Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 110 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 111 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 112 Jeffrey A. Wakolbinger, Compositions Are Being Sold for A Song: Proposed Legislation and New Licensing Opportunities Demonstrate the Unfairness of Compulsory Licensing to Owners of Musical Compositions, 2008 U. Ill. L. Rev. 803, 804 (2008). 113 Jeffrey A. Wakolbinger, Compositions Are Being Sold for A Song: Proposed Legislation and New Licensing Opportunities Demonstrate the Unfairness of Compulsory Licensing to Owners of Musical Compositions, 2008 U. Ill. L. Rev. 803, 804 (2008). 114 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 115 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 116 Jeffrey A. Wakolbinger, Compositions Are Being Sold for A Song: Proposed Legislation and New Licensing Opportunities Demonstrate the Unfairness of Compulsory Licensing to Owners of Musical Compositions, 2008 U. Ill. L. Rev. 803, 804 (2008). 117 Jennifer Mariano Porter, Compulsory Licensing and Cell Phone Ringtones: The Phone Is Ringing, A Court Needs to Answer, 80 Temp. L. Rev. 907, 929 (2007). 118 Jennifer Mariano Porter, Compulsory Licensing and Cell Phone Ringtones: The Phone Is Ringing, A Court Needs to Answer, 80 Temp. L. Rev. 907, 929 (2007).

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multimillion-dollar profit increase for providers.119 Conversely, if the licenses were to remain at market value, publishers could continue to reap similarly massive benefits.120 After a subsequent revision of the act removed a number of the burdens on ringtone providers seeking the statutory rate, providers began to demand it.121 This required a great deal of litigation regarding a ringtones character to determine if ringtones qualified as derivative works, a requirement for invoking the compulsory licensing rate.122 In October of 2006, the United States Copyright Office officially deemed ringtones to be derivative works, and therefore subject to 115s compulsory licensing scheme.123 This finding not only meant providers could now license ringtones at a significantly reduced rate, but also that any song released in the U.S. could be made into a ringtone without the permission of the songwriter or copyright holder, so long as that rate was paid.124 Despite this finding, the application and legitimacy of this compulsory licensing scheme in the context of ringtones is still a matter of great debate. Some argue since modern ringtones commonly consist of a clip of a song being played, those ringtones should qualify as a public performance, thereby necessitating additional rates be paid beyond those provided by the compulsory licensing scheme.125 Additionally, some argue that the free market should determine licensing, as was the case before the statutory rate debate.126 Others argue, more broadly, the current legislative regime is flawed in that it has not allowed for copyright protection to work for its intended beneficiaries, namely the songwriter and the public.127 Regardless, legal debates have persisted past the greatest
119

Jennifer Mariano Porter, Compulsory Licensing and Cell Phone Ringtones: The Phone Is Ringing, A Court Needs to Answer, 80 Temp. L. Rev. 907, 929 (2007). 120 Daniel M. Simon, Cell Phone Ringtones: A Case Study Exemplifying the Complexities of the S 115 Mechanical License of the Copyright Act of 1976, 57 Duke L.J. 1865, 1866 (2008). 121 Steven Masur, Ursa Chitrakar, The History and Recurring Issues of Ringtones: Lessons for the Future of Mobile Content, 5 Va. Sports & Ent. L.J. 149, 151 (2006). 122 Bryan Dean, Recasting Ringtones As Public Performances: A Proposal to Amend Section 110(4) of the Copyright Act, 39 AIPLA Q.J. 247, 249 (2011). 123 Daniel H. Mark, Wringing Songwriters Dry: Negative Consequences of Compulsory Licensing for Ringtones, 10 Vand. J. Ent. & Tech. L. 533 (2008). 124 Daniel H. Mark, Wringing Songwriters Dry: Negative Consequences of Compulsory Licensing for Ringtones, 10 Vand. J. Ent. & Tech. L. 533 (2008). 125 In re Cellco Partnership, 663 F. Supp. 2d 363, 92 U.S.P.Q.2d 1811 (S.D. N.Y. 2009). 126 Daniel H. Mark, Wringing Songwriters Dry: Negative Consequences of Compulsory Licensing for Ringtones, 10 Vand. J. Ent. & Tech. L. 533 (2008). 127 Kurt E. Kruckeberg, Copyright "Band-AIDS" and the Future of Reform, 34 Seattle U. L. Rev. 1545, 1546 (2011).

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profit period for ringtones in the mid 2000s to today. As described above, ringtones continue to take on new forms. With each advance in technology ringtones will have to be re-evaluated to determine the applicability of 115s compulsory licensing scheme. Needless to say, this will require more litigation, which, if ringtones continue to evolve, may never end.

CRITICAL ANALYSIS OF RINGTONE TECHNOLOGY

This section will discuss the future of ringtone technologies and the market potential that lies ahead. Additionally this section will attempt to analyze the brief history of ringtones detailed above in order to provide lessons for companies currently developing technologies in this field, as well as provide advice for those looking to enter this market.

The Future of Ringtone Technology

Although the ringtone market is desperate for innovation to bring it back to digital media domination, its uncertain how this may occur. On the one hand, ringtones serve such a limited function that anything straying far from an alert seems unlikely. This no doubt limits the potential for innovation. As detailed above, however, companies continue to develop iterations of this alert function. As smart phones continue to phase out lesser capable phones, traditional cash cows for the ringtone market such as mastertones will doubtlessly continue to decrease in popularity. This should be encouraging for the future of the technology, however, because as smart phones get smarter, the possible avenues for an emerging iteration of the same technology continue to increase. With MP3 capabilities came mastertones, with video capabilities came video ringtones. Perhaps in the future our tattoos wont just vibrate, theyll talk to us as well. Two things are certain about the future of ringtone technology: phones will always necessarily ring, and as long as there is money to be made in this space, companies will continue to exploit modern technologies to ensure they are the ones making it.

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Lessons for Current Ringtone Companies

Consumer interest and new technologies go together hand-in-hand. As one changes, so too does the other. In the world of mobile phones, these changes can happen rather rapidly. Like compact disks, old ringtone technologies are becoming obsolete. Current companies with an interest in ringtone technologies must understand this, and adapt accordingly. Companies like Jamster! and Vringo are at a unique disadvantage due to the fact that their company relies on ringtones alone. Where Apple and Google offer ringtones among myriad other technologies, namely the phones themselves, Jamster! and Vringo must continue to innovate their ringtone technologies, or expand to offer more. Of particular significance to consumers is individualization and customization. Ringtones used to be hip, in that they allowed a person to show off his or her unique qualities by which ringtone he or she chose. As companies advance their technologies, ringtones must maintain this minimal aspect of individualization in order to keep the technology relevant. Nokia knows this better than anyone,128 and its tattoo patent proves it. Tattoos commonly operate to show off an individuals unique interests. Whereas tattoos were previously viewed as the seedy province of old salts, sideshow freaks and biker[s,] today, tattoos have firmly planted themselves within mainstream society.129 It has also been noted as tattoo technologies advance, so does the tattoo industry, generating an increase in public interest.130 Although Nokias patent may never actualize as a marketable product, it demonstrates recognition that consumers demand individualization, and an effort to meet that demand. Google has made its fortune from selling advertising, so inserting ads into its ringtone technologies seems more obvious than innovative. Google should be wary though, as many people became disenchanted with ringtones due to their sometimes

128

The Atlantic, Death of a Ringtone: The Rise and Fall of Nokia, July 16, 2012, http://www.theatlantic.com/business/archive/2012/06/death-of-a-ringtone-the-rise-and-fall-ofnokia/258562/ (last accessed December 13, 2012). 129 Carly Strocker, These Tats Are Made for Talking: Why Tattoos and Tattooing Are Protected Speech Under the First Amendment, 31 Loy. L.A. Ent. L. Rev. 175, 176 (2011). 130 Carly Strocker, These Tats Are Made for Talking: Why Tattoos and Tattooing Are Protected Speech Under the First Amendment, 31 Loy. L.A. Ent. L. Rev. 175, 176 (2011).

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obnoxious nature.131 If Google chooses to play an advertisement in lieu of a ringing sound or song while a caller waits for another user to answer, it risks driving consumers to different products. Of course, it could just as likely set a precedent that all providers follow. If its technology works as planned, the customization aspect could have a useful effect that the consumer ultimately enjoys. Each of the major ringtone companies seem to understand that mobile phones have become extensions of the users that own them. As such a prevalent part of modern life, consumers demand their phones be unique to them, so as to stand out in the crowd. Current companies, while continuing to offer new variations on ringtone technologies, must maintain the individualization that made ringtones the once dominant form of digital media in the first place.

Suggestions for Future Ringtone Technology Entrants

Any entrant to the ringtone market faces a steep uphill battle. With the market dominated by giant tech companies, it would take a substantial innovation for a company to cement any significant claim of the market. Apple, Google, and Android currently dominate the smart phone market, holding sales agreements with all of the major mobile phone providers. These major companies also generate revenue from a number of different areas of technology. While their ringtone technologies remain important to give their mobile phones a unique edge, each of the companies could survive if their ringtone ideas dont catch on. Despite this, these companies continue to pursue innovation in the field. Newcomers to the market would be in direct competition with these companies, and it is unclear how a small company could ever thrive. As one example, Vringo sought to stake its claim in the market by buying a number of patents from the once dominant ringtone company Nokia. They are now in litigation with companies such as Google over some of these patents, and each claims outlook seems promising.132 Theres no telling what this means for the company. Whether it will find success in trolling its larger
131

Bloomberg BusinessWeek, Rudetones: ringtones Are Getting Rude, June 24, 2005, http://www.businessweek.com/the_thread/techbeat/archives/2005/06/rudetones_ringt.html (last accessed December 17, 2012). 132 iStockAnalyst, Vringo (VRNG) Awarded $30M in Google Patent-Infringement Suit, November 6, 2012, http://www.businessinsider.com/vringo-patent-lawsuit-2012-11 (last accessed December 13, 2012).

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competition, or eventually innovate its way to independent success. What a newcomer to the market could take from any of the ringtone companies present and past is that constant evolution is key. The ringtone market was once the most lucrative digital media stream in the world. All present companies are to blame for letting that slip away. Any company seeking to return ringtones to prominence must remain creative, changing as consumers change, and adapting its technologies to the ever-advancing mobile phone market.

CONCLUSION
The ringtone market has generated unprecedented revenue and undergone unpredictable change. Consumer interest in ringtones has run the gamut from a highly desired feature to a basic expectation. Where before ringtone capabilities alone were enough to drive consumers to a particular phone, now these capabilities, like a clock or calculator, are the norm with any phone. Although enthusiasm for ringtone technology has diminished, with perhaps its best days behind us, it will never truly die. Humans will continue to use phones for the foreseeable future. Phone manufacturers will continue to seek a competitive edge with innovative technologies to attract consumers. As long as phones ring, the way in which they do so will continue to attract consumers and in turn generate profits. Recent patent filings prove this. Companies continue to innovate in their ringtone technologies in hopes that, as with the first polyphonic-ringtone-capable Nokia in 2002, their products unique capabilities will give them an edge over the rest. While this remains a lucrative market, it currently needs a dramatic innovation to return it to prominence. Whether this innovation comes from an already dominant company or a newcomer to the market is uncertain. Regardless, I believe such a lucrative innovation is inevitable.

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