The Economist has a nice piece on the ringtone business.

"Ringtone sales were $3.5 billion worldwide last year, up by 40% from 2002, according to ARC Group, a consultancy. Europe and Asia lead the way, but in America the Yankee Group, another consultancy, recently raised its estimate of last year's ringtone sales from $50m to $80m. Sales of ringtones, costing up to $4 each, have now overtaken those of CD singles. Many artists now make more money from the former than the latter. Ringtone sales also outstrip legal internet download services, such as Apple's iTunes, which generate under $100m a year worldwide."

"The appeal of ringtones, to teenagers in particular, is that they act as a fashion statement. Sound quality is improving fast: newer phones support polyphonic playback and the latest handsets allow actual music clips, called "true tones", to be used as ringtones. Instead of a plinky-plonk rendition of the Britney Spears hit, "Toxic", as your ringtone, you could have a brief sound clip of Britney herself."

There are some groups out there that already earn more from ringtones than from CD sales. Ringtones offer indeed a interesting new channel for suffering music companies.