New Technology To Crush Label's Ring Tone Revenue Stream

As if song piracy wasn't enough to send thousands of our friends to the unemployment line over the past few years, now the evil technology nerds are threatening to rob major labels of their newest revenue stream, ring tones. The cell phone ring-tone industry sold $3 billion worth of song clips last year alone and generated $148 million for musicians and songwriters. A new company, however, is threatening to cut into that revenue stream substantially. The year-old software company Xingtone allows users to transform digital music files of any song on their hard drive into ring tones. Needless to say, the artist or label are not paid.

EMI's senior VP of digital development and distribution Ted Cohen told Rolling Stone, "It's troubling that a company that makes software would be profiting off the backs of artists when this business is just getting started."

Some labels, however, are embracing the technology. Artemis Records recently packaged the Xingtone software ($14.95 value) with copies of Sugarcult's Palm Trees And Power Lines and Hollywood Records now sells Xingtone versions of the Polyphonic Spree, Hilary Duff and Breaking Benjamin songs.

So who is right? Is this new technology, in fact, illegal? Xingtone says no, claiming that their conversion software falls under fair use. "When people compare us to Napster, they get this thought that somehow you're searching this big database of Xingtone content," Brad Zutaut, the company's co-founder and chairman, told RS. "There is no content. We're not Napster. Are we innovative and cool and all the great things Napster is? Absolutely. But we're not illegal."

Ultimately, I'd imagine that this one will have to be decided by the judicial system.

New Technology To Crush Label's Ring Tone Revenue Stream