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Tech Thursday, January 27th 2011 at 4:16 pm

This Ringtone Made Almost Half a Billion Dollars

Remember the Crazy Frog ringtone fad from the mid ’00s, which consisted of motorcycle noises made by an animated frog? (On a related note: Remember ringtones?) Well, not only did a remix of that ringtone top music charts across Europe in 2005, but that annoying ringtone generated worldwide sales in excess of $400 million. So how much did you say your iPhone app made again?

The sound behind the magic was made by a then-17-year-old named Daniel Malmedahl, who posted an audio file of himself imitating motorcycles on his website in 1997. In one of the early examples of someone’s silly joke going massively viral, the sound gained popularity in Sweden after Malmedahl performed it live on Swedish television. But it really took off when a man named Erik Wernquist encountered it on the Web and made a frog animation to accompany it. Then, in one of the earlier examples of a company cashing in on someone’s silly joke gone massively viral, in 2004, a company called Jamster licensed the rights to the sound and animation and started marketing it as a ringtone. (In a 2005 interview, Malmedahl said that he and Wernquist were getting a cut of the ringtone sales, “But I don’t think it’s even a little percent of how much they are making from it.”)

According to a May 2009 blog post by mobile Internet company Bango, Crazy Frog generated sales estimated to be “in excess of $400 million dollars” over the course of its life, with up to “50 million users worldwide (up to 6 million in the UK alone) downloaded one or more Crazy Frog variants within two years to their phones.” 3G strategy consultant Toni Ahonen cites a similar figure, writing that Crazy Frog “sold half a billion dollars.” It’s unclear reading both sources whether those figures comprise ringtone sales alone or include the dizzying number of Crazy Frog derivatives and spinoffs which ensued, including remixes galore, musical singles, and assorted merchandise. My guess would be that it includes at least some of the other stuff, since accepting Bango’s 50 million user downloads figure, even if 25 million more people downloaded the ringtone since then, which seems unlikely enough (though Europeans have a seemingly bottomless appetite for Crazy Frog and his zany stunts), and setting ringtone prices at a steep $5 each, all of these downloaders would need to buy more than 5 Crazy Frog variants each to hit $400 million.

Still: That’s an insane amount of money for a 10-year-old motorcycle sound and a crummy animation. (Through a series of acquisitions, Crazy Frog and its parent companies are now owned by Fox.) What lessons can be drawn from this?

One: Especially for online ‘viral content,’ which tends to draw bottom-of-the-barrel ad rates, merchandising is where it’s at: The folks behind meme-factory Cheezburger Networks say that a significant amount of their company’s revenue comes from books, T-shirts, and other merchandise. (The folks behind Angry Birds, which has done a respectable though by no means Crazy Frog-sized business at more than 12 million app sales, seem to be quite aware of this fact, as witnessed by their relentless expansion into animated series and board games in addition to every platform ever.)

Two: For all the hype and attention garnered by smartphones, they still make up a comparatively small share of the global phone market. According to Vision Mobile, as of the first half of 2010, smartphones made up less than 20 percent of the 620 million phones shipped worldwide; according to a Forrester poll from September 2010, 82 percent of American consumers own a cellphone, but only 17 percent own a smartphone. Crazy Frog was successful in part because ringtones don’t require retina displays or quad core processors: PPK writes,

Thus, four years ago one succesful ringtone [Crazy Frog] that sold for more like 9 cents than 99 was worth one-eighth of this year’s entire app store economy. It was so succesful because it wasn’t dependent on those silly credit cards and could reach all people with a mobile phone.

There’s a second factor: Ringtones are less technologically advanced than mobile apps, so more phones can use them. In the not too distant future, though, all mobile phone will be able to run apps, while there’s no reason to assume credit cards will increase their reach at the same rate.

Android may change things over the course of the next few years, and smartphones are on a growth curve such that it’s still fair to say, as many analysts and tech watchers do, that smartphones are the future. But they’re still only the present for a comparatively small number of people, and it sometimes takes a frog making motorcycle noises to remember that.

(Tomi Ahonen via PPK via Daring Fireball)

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