Ringtones - the Starbucks of the digital world ?

There are 2 types of people in the world.....those that pay twice the amount for a few seconds of a song on a mobile - aka a ringtone - and those that don't

The behaviour of ringtone buyers is totally inexplicable to those others - the New York Times is the latest to throw up its hands in exasperation (the US is only really getting into this now? - its been a European phenomenon for years).

We did some analysis of the research on this phenomenon awhile back, and really there are 2 possible answers to "why".

The first is that its a "context based" experience - a ringtone is not seen as music, but as a way to personalise your mobile, and make it part of "you" - and that carries a higher "acceptable price" tag. This is the "official" answer that most of the research orbits around, one way or another. There is a part of this body of work that worries me, in that what gets glossed over is that most ringtone buyers are kids and PAYG phone owners, and that lends some credence to....

The second - and less socially acceptable answer - that there is a more vulnerable (and clearly fairly large) segment of any population who are part of the "one born every minute" demographic and who are (yet again) being fleeced. This is the unofficial and empirical answer, based on hundreds of years of the successful existence of hucksters, fraudsters, con-men, astrologers and other varieties of snake oil salesmen.

Clearly there is a huge market opportunity for personalised snake oil.......

At the very least it persuaded me that the "Rational Economic Decision Maker" so beloved of NeoClassical economics was a bankrupt concept.

But, for those who scoff at the abject stupidity of ringtone buyers, beware - next time you quaff your Starbucks coffee think carefully about the impact of context on commodity pricing....

Postscript - wasn't clear on our end conclusion after the analysis done - in essence there has always been a market for "highly priced context based experiences" - they tend to be faddish in nature, (as Ringtones in fact are - the market is now in decline in Europe), mainly afflict the youth, and afterwards everyone seems to be a little bemused as to what they ever saw in it.