It's a move that makes sense on the surface: Warner Music Group (NYSE:WMG) is teaming up with eBay's (NASDAQ:EBAY) Skype to sell original music ringtones to users of the popular online chatting service. Skype has more than 74 million registered users, so one can imagine there's a good chance of moving more than a few Green Day, Paul Wall, and Madonna 30-second clips for $1.50 a pop.
Then the obvious hits you: Folks are drawn to Skype because they want to skimp on long-distance charges by voice-chatting with fellow users for free. Skype even offers a bargain-priced service to call non-Skype users anywhere from their Web-enabled computers for just pennies a minute. Folks who may be too cheap to pay for conventional phone service are also likely to be too cheap to pay for high-end wireless phones with digital download capability.
You'll also have people who object to paying 50% more for a ringtone than what a download for the entire standalone track would run you at a place like Apple Computer's (NASDAQ:AAPL) iTunes Music Store.
I'm not dismissing ringtones as an attractive market in general. During the InfoSpace (NASDAQ:INSP) conference call last week, the company pointed out that ringtones were generating twice the revenue of standalone digital song downloads. Wireless phone entertainment and functionality is a huge growth industry. It's why mobile browser software specialist Openwave (NASDAQ:OPWV) was singled out a few months ago as a recommendation to Rule Breakers newsletter service subscribers.
Warner's heart is in the right place. It's just beating in the wrong body if it expects to persuade cost-saving Skype users to open up their pocketbooks. I'm sure there are plenty of Madonna and Green Day fans on Skype, but this kind of pitch would be better suited toward a music-driven community like MySpace.com at worst, or a paying music service like Napster (NASDAQ:NAPS) or RealNetworks' (NASDAQ:RNWK) Rhapsody at best. Even though eBay -- a winning Motley Fool Stock Advisor stock pick -- did the right thing in acquiring Skype, you can't market all things to all people.
Wake me up when this ringtone ends.
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Longtime Fool contributor Rick Munarriz once had his band signed to Sony's Columbia Records label. It didn't exactly pan out. T he Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
