The magic of ring tones

On an email list I participate in, the the $1.99 iTunes video pricing model was being discussed. I made some points similar to the ones in my previous blog entry on the subject to which a colleague stated, “This all makes sense to me… except how do you explain ring tones?”

Ring tones blow my mind. Paying $3 for part of a song when you only pay $1 for the whole song is counterintuitive, but maybe the product of these factors explains it:

  • Mobile phones are relatively closed technologies. This summer Verizon sold me an expensive V Cast capable phone. About a week later I went back to the store to get a USB cable and connection software to get my contacts into the phone. They wouldn’t sell it to me! If they did that, the salesman told me, people would begin using their mobile phones as modems for their PCs and eat into their $59/mo wireless broadband business. (I totally deserve to be whacked with the stupid stick for falling into that trap. 194 days until I can leave VZ without penalty.)
  • Ring tones are impulse buys. Buy now, see the bill much later. Many ring tones are bought by teenagers who don’t even pay the bill when it comes in. Talk about inelasticity of demand to price! Like the parents of many teenagers, the ring tone expenditure fight is not one of the key battles I choose to engage. With piercing, tattoo, and, well you know the rest of the battles looming in the future, I’ll bend on ring tones.
  • As great as that business is, the ring tone scam has just got to die soon. It’s just one clever, well distributed hack away from oblivion. If you think about it, it shouldn’t be illegal. If I buy a piece of music either from iTunes or a CD, I have purchased the right to play it on whatever device I want. Ring backs are excluded here because that could be construed as a type of redistribution if you’re overly aggressive in defining such things (as the RIAA is).

The problem with phone companies is that nearly everything they sell is a commodity. They so dearly want to be media companies when they really are only dumb pipe providers. They want to design swimming pools, but are stuck managing the sewers.

But for brief moments in their terribly unexciting, Ed Norton-like existences phone companies actually provide a product or service that can command premium pricing. When that happens, they circle the wagons and protect the exclusivity of that offering. Like Charlie in Flowers for Algernon, they know exactly how the story will end and want to make the most of it while they can — keeping their networks closed to real innovation in order to pursue short-term and unsustainable profits in tiny slivers of their businesses.

Moments after posting this, I received an email from another colleague pointing me to Shelly Palmer’s excellent piece on the this issue.

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