The Ringtones Racket

Steve Jobs, introducing iTunes 7.4 during last week’s Apple special event: “We’re going to ship a new version of iTunes tonight, to support some of the new products you’re going to hear about shortly. And the biggest new feature is going to be ringtones. Well, we’re going to do ringtones in our own special way.”

Apple’s own special way of doing ringtones is this: You can only use songs purchased from the iTunes Store; you must pay an additional 99 cents on top of the price of the song itself; only a small subset of the songs at the iTunes Store are eligible; and, if you decide to create a second ringtone using a different segment of the same song which you’ve already paid for twice, you must pay for it again. But you do get to pick which segment of the song to use.

This “special way” seems fair only when compared to the ringtones offered by competitors, which, as Jobs pointed out in his keynote, typically sell for $2.50, which price includes only the ringtone snippet, not the entire original song itself.

The whole ringtones racket is predicated on the notion that ringtones are something different than songs. This notion is bullshit. You don’t turn songs into ringtones; you treat them as ringtones. They’re not even a different file format. It’s just a different context for playing the same song on the same device.1

This false notion that ringtones are something in and of themselves is an anachronism, an artifact dating back to the time when mobile phones existed in their own ecosystem, wholly separate from the PC or the Internet. There was no way to transfer songs from your computer to your phone, because phones didn’t support USB or Bluetooth. Back then, if you wanted new ringtones, the only way to get them onto your phone was through your mobile service provider. And because people did want them, and there was no other way to get them, the mobile providers were able to charge exorbitantly high prices for them.

But ringtones are simply digital audio files — no more, no less. (Actually, they are less, given that most are only 15 or 30 seconds long.) The way it should work today, not just with the iPhone but with any music-playing mobile phone, is that any song the phone can play should be allowed to be specified as a ringtone. If you shouldn’t have to pay for each device on which you play a song — computer, iPod, Apple TV — then clearly you shouldn’t have to pay for each context for playing the same song on the same device.

Instead of the complicated, confusing mess of a ringtone policy that Apple announced last week, what they should have announced is this: Any song you can play on your iPhone can be used as a ringtone for no additional charge. Want a new ringtone? Just buy it from iTunes or rip it from a CD.

Yes, this might have further antagonized Apple’s already-contentious relationship with the music labels (and with the entertainment media conglomerates in general; cf. NBC), but the reason these relationships are rocky is that the executives running these companies are stubborn fools who are only willing to consider ways to keep things the way they were, and who hold their own customers in utter contempt. You can’t reason with the masterminds behind “ringles”.

The distinction between ringtones and songs is an artificial marketing construct. It is a misconception, albeit a widely held one, that there is any foundation in copyright law for this, i.e. that an honest consumer is obligated to pay for ringtones separately from “regular” songs for some legal reason. Not so. Copyright attorney Nilay Patel dispelled this notion last week in a piece at Engadget. Patel points out that, oddly enough, even the RIAA agrees:

Well, the RIAA wanted to be able to distribute ringtones of its artists without having to pay them big money to do so (surprised?), and it won a decision last year before the Copyright Office saying that ringtones weren’t “derivative works”, meaning they didn’t infringe on the copyright of the songwriter.

So if you have the right to play a song, you have the right to use it as a ringtone on your phone. There’s no reason to feel one iota of guilt about using tools like MakeiPhoneRingtone or iToner.

All That Is Gold Does Not Glitter

Clearly, in some way, Apple is beholden to the whims of the music labels with regard to iTunes’s ringtones support. There are over six million songs available for sale through iTunes, but, as of this writing, only 500,000 are available for purchase as ringtones.

Why aren’t all songs available for purchase as ringtones? Clearly it’s not Apple’s choice, but a limitation imposed upon them by the music labels. Even if we concede for the moment that it’s reasonable to charge additional money to use songs as ringtones, the question remains: What is wrong with the music labels that they won’t allow Apple to sell every song at iTunes as a ringtone? It boggles the mind. The recording industry is going down the tubes because people are buying less and less music each year; but here, in iTunes, they’re willfully turning down potential sales.

Customer: I’m willing to pay you an extra dollar for this song I’ve already given you a dollar for, so that I can use it as a ringtone on my iPhone.

Music Labels: Nope.

iTunes — the application, not the store — has long supported two distinct types of music: files obtained from outside the iTunes Store, and those purchased from the iTunes Store and restricted by FairPlay. The difference being one’s afforded usage rights; FairPlay-protected songs are restricted in terms of the number of devices they can be played on, for example.

With the introduction of ringtones support, iTunes now breaks songs into three groups:

Non-iTunes Store songs. iTunes Store songs which are not eligible for sale as ringtones. iTunes Store songs which are eligible as ringtones.

Apple’s right to sell songs through iTunes is not simply a matter of copyright law. If we assume, as seems likely, that the music labels stipulated in their contracts with Apple that songs to be sold at an additional cost for use as ringtones must be cleared separately, the distinction between groups 2 and 3 is not under Apple’s control.

But group 1 — those songs in your iTunes library which you did not purchase from the iTunes Store — is under Apple’s control. Apple can’t charge you for the right to use these songs as ringtones, but they could allow you to do so for free, just as you’re allowed to play them on a Mac, iPod, Apple TV, or iPhone for free. They could do it, but they haven’t.

From the inception of the iTunes Store, Apple has done right by its customers. The iTunes Store was conceived and designed as something customers would enjoy. It competes fairly, both against traditional music sales on physical media such as CDs, and against illegal bootlegging. It can’t beat bootlegging on price, but it can beat it in terms of convenience and user experience. Three billion songs sold can’t be wrong.

iTunes’s new ringtone feature, though, is the first time Apple has created a feature that is only usable with iTunes Store tracks. Burning to disc, transferring to peripheral devices such as iPods and Apple TV, playing over the air to Airport Express — in all these cases, the features work with all songs in your library, wherever they came from. In fact, prior to ringtones, the only special treatment iTunes granted to iTunes Store files were additional restrictions, such as the “only five authorized computers” rule.

The difference with ringtones isn’t legal; it’s that there’s money to be made.

Even if you agree that the entire notion of a “ringtone industry” is a racket, you might be tempted to argue that Apple would be foolish not to participate simply because it’s a profitable endeavor. But rackets seldom continue forever. Short-term, yes, surely Apple is already generating additional revenue from the sale of ringtones. But this money comes at a cost: resentment.

For any song you already own on CD, Apple is asking you to pay three times for it in order to use it as a ringtone on your iPhone: once for the CD you’ve already purchased, again to buy a needless duplicate of the track from the iTunes Store, and a third time to generate the ringtone.

A fair, free “just use the songs you already own as ringtones” policy wouldn’t generate revenue directly, but it could be used as a powerful marketing bludgeon. Consumers know what ringtones are, and they know that mobile providers want them to pay through the nose for them. Imagine an ad proclaiming that with the iPhone, any song in your iTunes library can be used as a ringtone. Want to use a new hit single as a ringtone? Just buy it from the iTunes Store, and play it everywhere.

The policy as it stands now, on the other hand, discourages people who know better from buying tracks from the iTunes Store. Apple may well close or change the loophole in a future iTunes update, but as of version 7.4.1, the “change the file extension” trick and yesterday’s newly discovered metadata trick (now used by MakeiPhoneRingtone 1.1) allow informed iPhone users to do what they should be able to do, both by common sense and U.S. copyright law: use any song they already own as a ringtone — but only with songs that aren’t protected by FairPlay.2

Faced with the choice between doing what’s right for customers or charging them money for something they shouldn’t need to pay for, Apple chose the latter. There is no middle ground. And any business that hinges on your customers “not knowing any better” is a bad business.