Online Shoplifters Grab Ringtones Worth $301 Million by 2006
Thu Jul 21, 2005 11:07 am
A startling study conducted by Qpass of 100 leading U.S. and European digital content Websites revealed that more than one third of the sites are unsecured, allowing users to 'shoplift' music tracks and download them as free ringtones. The extent of the problem in US may have already cost the mobile and music industries an estimated $40 million since the beginning of 2004, and a further $123 million by 2007, according to Qpass.
Qpass attributes this problem to the need for the mobile and music industries to enable users to preview music before they purchase it, an important part of the customer purchasing experience. Two thirds of web sites tested offered preview music files between 15 and 30 seconds, the perfect length to convert into a ringtone.
Preview content can be secured by using streaming, embedded pre-listening or the use of a DRM-protected file format. The study of digital rights vulnerabilities on mobile music web stores was conducted as part of the ongoing development of the Qpass Content Delivery Platform, which offers a comprehensive solution for securing mobile content.
The Websites tested included 42 mobile carrier portals and 58 online entertainment and music stores offering full track music downloads. Out of the sites tested, 40 percent of carrier sites and 31 percent of other portals such as online music stores and entertainment sites were unsecured. Ironically, some of the sites surveyed specialized in selling ringtones, which are inadvertently giving away their products for free due to the security hole.
"This is the mobile and cyber-equivalent of test-driving a car and then not having to give it back," said Steve Shivers, Senior Vice President, Corporate Strategy and Development at Qpass. "When the trial is as good as the actual product, why should consumers spend money buying it? Consumers may not be aware that this ability to download 'free' ringtones is actually a violation of the music industry's digital rights. Unfortunately, the music industry has put its faith into the mobile industry to ensure its offerings are secured when downloaded to a wireless device. The amount of revenue loss to both the mobile and music industries is concerning due to what appears to be a complete oversight."
The ringtone market currently accounts for between 6 to 10 per cent of music industry revenues worldwide according to Jupiter Research and Qpass, making this a significant revenue leakage problem for the industry. Qpass estimates that more than 20 percent of mobile users worldwide have downloaded content to their phone to date and this figure is expected to rise. Ringtones are among the fastest growing types of mobile content. For the global music industry, increasingly under attack from declining CD and single sales, ringtones sales have provided an important additional revenue stream.
