Muzicall is enticing operators to its ring-back tone (RBT) service by promising additional revenues from an integrated advertising strategy.  The RBT service provider has outlined a two pronged strategy to increase the European RBT market with a view to selling the tones as advertising space in 2008.

Richard Jackson, business development director at Muzicall says the revenue potential for ring-back tones could be maximised by using the time traditionally associated with a calling tone to play an ad.

He says the company has identified two opportunities for advertising tones: corporate RBT’s, whereby someone calling Coca-Cola would hear the company’s theme tune, for example, and consumer RBT’s, in which a branded tone would replace the traditional one, essentially functioning as an advertisement, in exchange for free air time for the user.  The advertising revenue would be shared between the operator and Muzicall.

“This type of advertising can be very targeted, because most of those (people) likely to call a specific number come from the same age group, with similar interests”.  Jackson told MM.  “We will try out first corporates in the UK and the Netherlands in the next 12 months.”

Talking to businesses about the potential for advertising on RBT’s is difficult, Jackson says.  “The problem is that the corporations don’t have just one operator,” he says, adding that their marketing departments don’t tend to deal with operators, presenting another hurdle.

Advertising tones hold potential only if enough traction can be achieved with RBT’s in the mobile market, but the tones have not received a warm reception in Europe.

Users in Europe still don’t understand the concept of RBT’s, Jackson says.  “The consumer is confused about ring-back tones,” he says “There are too many pricing models, and the operators are not marketing the service.  We need to get the consumer to understand it.”

Muzicall’s first challenge is to not only raise awareness of but also to encourage use of what is effectively a less popular relative of the ring tone.

Operator Deals
Muzicall plans to focus on expanding the European RBT market throughout 2007. It already has an exclusive deal to manage and host Vodafone Netherland’s RBT service, and in the UK it manages T-Mobile’s RBT-technology platform and 3’s RBT-content aggregation.  The company says it has also secured other deals.

Muzicall focuses solely on RBT’s, but other companies such as Real Networks, are looking to bundle the product with personalisation content, such as wallpapers and video.

Real Networks plans to launch and RBT-subscription package that forms part of a wider content catalog, positioning itself as a managed-and hosted service provider rather than just a licenser of applications.  It has developed a platform to deliver a broad range of content to operators.

But Jackson says it is better to focus on selling only RBT’s, to boost the market and educate users.  “There are too many pricing models,” he says.

Because RBT’s need to be put on the core network, they are sold only by operators.  “It’s an on-deck proposition by operators,” Jackson says.  He adds, however, that there is some potential in selling RBT’s off-deck.  “Seventy percent of all content comes from off-deck,” Jackson says.  “We need to open it to RBT’s also.  Operators didn’t create the content market.  The Jamsters did.”

Jackson says that RBT’s might not make the same margin as other music services but they still have the revenue potential.

The service has been a phenomenal success in some Asian countries, such as South Korea and China, but Europe lags behind.  “We need to get European penetration from 2 percent to 10-15 percent,” Jackson says.  “Strategy Analytics says that the ring-back tone market is US$5.8 billion.  At least 30 percent of that is in Europe.

It’s doubtful whether the service will ever achieve the “phenomenal” 45% penetration rates in Europe that is has achieved with South Korean operator SKT, according to Richard Baker, general manager of technology, products and solutions for EMEA at Real Networks.  But he says he is positive about the product’s growth potential.  “We’re seeing good rates in the US,” he says.

Initially, Muzicall is aiming to host and fully manage operators’ traditional RBT services.  Operators are interested in outsourcing their RBT offerings because it’s a complicated content service to manage, Jackson says.  “Vodafone Netherlands said to us, “We are struggling with, it’s too complicated.  We see revenue potential in it.  Take care of it,” he says.

“It’s a revenue share with the operator,” he says.  “We take all the capex.  It’s no cost, just revenue for the operator.”

Published by Mobile Media Magazine - February 2007