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Ringtones Breed Tension Within Music Industry

By Eriq Gardner

By 2004, mastertones were the hot new thing. They had replaced polyphonic ringtones (multipitched tunes), which had replaced monophonic ringtones. Mastertones were compressed snippets of studio-recorded music. In order to offer them to the public, ringtone content aggregators needed to obtain both publishing clearance and permission from those who held the rights to the recordings. That meant negotiating with record companies.

According to Steve Gordon, author of the book “The Future of the Music Business” and an attorney who has represented both aggregators and record companies, the labels were peeved when they learned how much the publishers had gotten from the aggregators. According to multiple so-urces, aggregators had typically agreed to pay 25 cents per ringtone or 10% of the gross ringtone revenue, whichever was greater. So when the labels, which had been used to getting 40% to 50% of gross revenue from sales of digital music files, demanded a similar percentage, aggregators bal-ked, says Gordon.

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