The tones, they are a-changing

Real musical samples are set to be the next big thing in ringtones. But with record companies in on the act, they won't come at pocket money prices

Emily's phone rings. She is a bright and fashion-conscious 16-year-old from London. A tinny version of Eamon's "I Don't Want You Back" emanates from the handset, appropriately signifying that it is her ex-boyfriend calling. If it had been her friend Kate the ringtone would have been Britney.

Emily's phone rings. She is a bright and fashion-conscious 16-year-old from London. A tinny version of Eamon's "I Don't Want You Back" emanates from the handset, appropriately signifying that it is her ex-boyfriend calling. If it had been her friend Kate the ringtone would have been Britney.

Just about all her friends have had different tunes assigned to their numbers, to identify them when they call. Yet she also thinks that ringtones are a "total rip-off", while still admitting to being addicted to buying them.

She is one among thousands of British teenagers fuelling what this year will be a £70m industry. According to Universal Records, in 2003 the Sugababes hit "Round Round" actually made a larger profit from the jingle than from the single.

Last May, Music Week magazine started a chart for ringtones, but long before that, the popularity of a ringtone was widely considered as good a sign of where the kids were at as any singles chart. In fact, the sale of CD singles has dwindled, while the ringtone business has risen to 10 per cent of the global music market. Yet unlike singles, ringtones haven't been making money for the record labels.

The reason is that royalties for mono- and polyphonic tones go entirely to the music publishers, who own the rights to the song. The labels only have the rights to the recording. (In the same way, if a band wants to perform a Beatles song, it has to pay the publisher, not the record company the Fab Four were signed to.)

The record companies, however, are set to ring the changes. The next generation of phones boasts the curiously archaic-sounding "hi-fi" capability, which makes them capable of playing so-called "sample" tones. These are simply snippets of MP3 files, and so, being excerpts of the original recording, royalties have to be paid to the labels.

And that could mean big money. Right now on the web, a sample tone of anything in the Top 10 is likely to cost about £4.50. This is the most expensive form of music ever created, by a factor of more than 25. An entire album of music priced like that would cost a whopping £400.

With the global ringtone market becoming part of an ever-expanding $3.5bn (£2bn) business, it's no wonder the record labels want to tap in to it. But surely there is a limit. By anyone's reckoning isn't £4.50 for 30 seconds of music a bit steep?

The problem seems to be a combination of the record labels wanting to make up for lost time and the fact that so many different people are involved in getting the music to your phone.

According to a recent report from the media analysts Informa, the labels typically want between 25 and 40 per cent of the price of a sample ringtone.

"And then," says Simon Dyson, co-author of the report, "there are all the others who want a slice of the pie - the publishers, the resellers, even the internet service providers."

The question remains whether the ever-increasing cost and sophistication of ringtones is a fad or a genuine development in the way that music is experienced and enjoyed. Analysts predict healthy growth for at least the next two years, but only if costs are matched to demand.

As playgrounds around the country can testify, the cost of ringtones is currently in step with the level to which kids are willing to indulge themselves. Despite still often retailing at more than £3, prices of mono- and polyphonic tones are rapidly dropping.

However, not only are the sample tones much dearer, they also invite direct comparison with the full tracks that can be downloaded off the internet for between 75p and 99p a pop.

It is this comparison that is sparking outrage in dozens of websites and chatrooms. The outrage is also leading people to seek creative ways of getting music on to their phones cheaply. And the record labels could hardly have chosen a worse group to annoy over a technology issue.

In the US, some are setting up websites that let you transfer music you already own to your phone. The leader is a company called Xingtones, offering a $14 software package that enables you to send any sound file that is on your computer to your phone. However, copyright law in America allows for private copying. In the UK, all copying is strictly illegal - save where there is a specific and well-defined exemption; and there isn't for copying between PC and phone (nor, indeed, between CD and iPod. We're all breaking the law).

For the Xingtones website to offer a similar service in the UK, it will either have to institute a mechanism for collecting royalties, or flagrantly flout the law. That has led rapidly to the creation of the "real music" ringtone industry, based on cover versions of the hits that the kids want, which neatly sidesteps having to pay royalties to the labels. The trouble with these, though, is that despite being MP3s they tend to sound like karaoke night.

Of course, that still leaves phones such as the Sony Ericsson P800, which can play a ringtone from any MP3 you happen to own converted to a wav file. The trouble is, it takes quite a lot of ingenuity to get the music from the computer to the phone.

According to Steven Mayall, the co-author of the Informa report, "the reason that the ringtone business has been booming for so long, in spite of the seemingly high prices, is because it's incredibly simple to get content straight to your phone if you pay for it - and quite difficult to get it without paying. The opposite has been true on the internet. But as phones become more sophisticated - more like mini-computers with high-speed 3G access to web-style content - the easier it will be to get hold of free music."

A survey for musically.com conducted in the US found that 51 per cent of people said they would download a pirate tone if they could, but overall only 26 per cent actually had.

If ringtones remain expensive and piracy becomes easier, the market for hooky ringtones will flourish. But that might only last until the record companies persuade the handset manufacturers to make piracy difficult or impossible. This is what has just happened in South Korea, where the local mobile operators and handset manufacturers have struck a bargain to limit what mobile phones can do with open MP3 content. We can expect more of the same in Europe: Sony Ericsson, for instance, has a deal with Sony Music, and Motorola has a three-year marketing partnership with MTV signed last year for $70m.

Meanwhile, back in the low-budget consumer world, I asked Emily what she makes of the new sample ringtones. "They're cool," she says. However, she thinks she won't be able to afford to get ringtones so often if she gets one of the new phones. As for making her own ringtone, she says she would have a go if someone showed her how to do it. But right now, she says, she still gets confused trying to download normal music from the internet. The record companies may be safe for a while yet.