Transcription
Huzzah! [Applause] Cheers, gentlemen, to another year of record-breaking ringtone sales. Of course, we did have a little help. Who could forget this year's best-selling cast of characters like DJ Penguino, Romeo the disco cheese wheel, Goblin? Just Goblin, and of course, Ring Chimp's latest star in the making, Skitso Toading just went platinum in Germany.
Now, if you'll allow me, I'd like to propose a toast. Here's to another year of record-breaking ringtone sales. Because, as we all very well know by now, >> everyone needs a phone. So, by that logic, everyone will always need a ringtone. >> And that is absolutely irrefutable.
Sir, who said that? I did, sir. >> Hold on. >> Okay. One sec. I see him. Who are you? What do you do here? >> I'm Mike, sir. Your vice president. >> And why haven't you spoken until now? >> Well, it's been difficult, sir. You insisted on putting me at the other end of a comically long table. [Music] It was funny at the time. It's fine. Listen, I have some concerns. >> What I said screw it. I'm a goblin. A goblin. Goblin. >> Hello, sir. I have some concerns. Out with it. I think our sales are about to drop. >> Hard. >> That's impossible. Read the plaque again. >> Look, I know people need ringtones, sir, but that doesn't mean they need to buy them. Besides, our business model is terrible. We use cute cartoon characters to lure people into these ludicrous ringtone subscriptions. We're getting like hundreds of complaints a day, but I've been working with legal and I think if we clean up our act, we could actually pivot into a >> Hey, Mike. >> Yes, sir. Do you know why we're called ring chimp? >> Um, because animal mascots make us look more approachable. >> No, Mike. Our company's called Ring Chimp because everyone at this table already knows it's monkey business ringtones.
In the mid-2000s, cell phone culture was in its golden age. You got to remember before Apple dropped the iPhone and permanently nuked the concept of mobile aesthetics, phones were actually interesting to look at. They came in a myriad of shapes, colors, and orientations. And the model you chose often said a lot about you. You had Blackberries for the refined businessman, Motorola Razors for the trendy teens, and the Jitterbug for geriatrics. But perhaps the most unique aspect, the part that truly portrayed the face behind each phone was the ringtone.
In 2002, a technological innovation in cellular hardware helped to drastically improve the audio quality of cell phone speakers, helping to take ringtones from this to this. And just like that, an entire industry was born. Suddenly, ringtones weren't just a mundane option buried in your phone settings. They were songs. Actual songs. Timeless like In Sync and Papa Roach. For phone users, young people especially, it was a gamechanger. The ringtone revolution provided an exciting new way for people to consume their favorite music, personalize their devices, and boldly express their music taste, sometimes annoyingly, and in public forums. But it was a hit. During a time when mobile devices were still quite primitive, ringtones became one of the first instances where people would actually look to their phones as a source of entertainment. You see, back then, phones really couldn't do much. You couldn't stream music. You couldn't watch movies. You couldn't even book convenient doctor's appointments with today's sponsor, Zach Do.
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Now, while ringtones might have just seemed like a fun little fad for record companies, they were a godsend. By 2004, music labels were turning their attention away from failing CD sales to focus on what was now becoming a billion-dollar ringtone industry. In fact, this new format had become so popular that music labels had begun to favor artists whose songs sounded better as ringtones. Suddenly, becoming a top ringtone artist was something to strive for, something that was rewarded. Quite literally, too. I mean, they actually tried giving out best ringtone awards for like 2 years. Wow. Ringtone. But I'm feeling that, man. [Applause] >> I don't think he's feeling it.
But regardless of its consequences, from 2003 to 2007, ringtones would make record companies billions in additional revenue. A welcome change for an industry that had spent the last 5 years getting kind of slapped around by online piracy. And it's no wonder it made money. In the 2000s, just a single 30-second ringtone of your favorite song could sell for anything from $2 to $5 per download. It was ludicrous. Do you know how much that is in Canadian? It's too much. Our money is probably closer to the value of a Runescape gold than US dollars. My point is, the ringtone industry had become incredibly lucrative. And it was this factor that would eventually inspire a group of eager German entrepreneurs to ask >> why should the record labels have fun? >> Enter Jamster or Yamba as they called it in Germany.
In the mid-2000s, the Jamster ringtone company exploded onto the mobile market with an advertising style that was it's pretty hard to forget. Oh, wow. This little alien is so cute. >> Oh, thank you. >> Text alien to 7555 to get this weird little freak on your phone. >> Oh, okay. Thought we were being nice. >> Now, the genius behind Jamster was the realization that they didn't need to have a physical roster of artists to sell ringtones. They could just make their own. With 3D software, Jamster had fabricated an entire virtual record label composed of dozens upon dozens of these soulless Europ idols. Each one deliberately designed [Music] to sell ringtones. And boy did they sell. By 2005, Jamster's cast of characters had generated over half a billion dollars for the company. in just that year alone.
But they weren't just selling ringtones. Jamster offered a simple text-to-order service that delivered all kinds of downloadable content to your phone. All you had to do was text the code that corresponded with what you wanted to get access to ringtones, wallpapers, games, and even videos. You got to remember this was before YouTube took off. In 2005, there were people who would actually pay to download something like this onto their phone. Guys, guys, you don't understand. I can watch this anytime I want. And thanks to Jamster's myriad cast of characters, there was something for everyone. You had Schnuffle Bunny for the moms, Gummy Bear for the kids, Anna Blue for the emo kids, DJ Mozart for the [Music] This one sucks. But out of all the characters that existed in the JMU, not one managed to rise to the monumental level of star power of Crazy Frog.
In 2004, a brand new character was welcomed into the Jamster family, one that would reach levels of success far beyond just ringtones. With Jamster's help, the Crazy Frog would go from a modestly viral internet video to a worldwide sensation, releasing three studio albums, two iconic video games, mountains of merchandise, and oh my god, he even toured. Crazy Frog was Jamster's poster boy. the ringtone star that demonstrated how companies like Jamster were capable of producing virtual talent that could rival the success of real-life pop stars. It was a testament to just how big the ringtone industry could be and perhaps just how much they could get away with.
You see, a big part of Jamster's marketing strategy were their commercials. In the 2000s, these ads would play incessantly and were a pivotal part of what made the brand a success. But if you pay close attention to them, you might notice something strange. A common phrase you'd often hear in these commercials was "text now to get this on your phone." But what you wouldn't hear was the price. In fact, the language they use doesn't even imply you're buying anything at all. "Text this number. Get this on your phone." They almost made it sound free. And in a way, it was true. You weren't buying anything. You were subscribing, oftentimes up to $10 a month for a ringtone subscription buried in the fine print of the ad. And all it took was a single text to fall for the trap.
Turns out Jamster's all-too-convenient texting service made use of a tricky little billing system known as wireless application protocol, aka Please be mature. In the 2000s, billing was the main payment method used for downloading ringtones. And it had a very exploitable little quirk. You see, WAP gave third-party companies the ability to apply charges directly to your phone bill with nothing but your phone number. Now, if this sounds sketchy, well, that's because it was. But the ringtone companies loved it. This meant that people didn't have to overcome the psychological hurdles of inputting their credit card for purchases. They could just text frog to 555 and instantly be subscribed to this. Hell, it was so easy even a child could do it. And they did a lot. On the internet, you'll find countless stories of children who ran their parents' phone bills into the hundreds of dollars, all from subscribing to ringtone ads that were clearly designed to get their attention. Seriously, if you were a kid in the 2000s, you probably remember just how prevalent these commercials were. I mean, they played everywhere all the time. According to a survey, in 2005, 87% of the United Kingdom had seen the Jamster Crazy Frog commercial an average of 26 times. That's a lot of bings. That's a lot of bing bings.
But Jamster's advertising strategy was aggressive for a reason. You see, they were trying to cast a net, one that was intended to trap as many customers as possible into a subscription service that was easy to fall for and hard to cancel. But how was this allowed? Wouldn't your carrier company be able to block these kinds of shady charges? Well, they could, but they wouldn't because they were cashing in on it, dude. Reports have shown that mobile phone carriers would often collect as much as 30 to 50% of the charges they facilitated through WAP billing. And they would then bury these fees at the bottom of your phone bill under ambiguous terms like "premium calling." Hell, some ringtone companies would even charge you without ever getting your permission. I mean, all they needed was your phone number. They could just add a charge to your bill and hope you wouldn't notice. It was that easy. Thanks to the profoundly insecure architecture of the WAP billing system, virtually anyone was capable of falling prey to this scam, the Graham scam. The scam was called cramming. In fact, some people could become victims before they ever even turned on their first phone. In the 2000s, mobile phone vendors would often receive hefty commissions based on how many subscription services they could tack on to your new cell phone, oftentimes without your knowledge. But it wasn't just ringtones they were peddling. During the height of the cramming scam, Jamster and its army of copycats would make millions stuffing people's phone bills with unsolicited wallpaper subscriptions, daily horoscopes, love calculators, complete digital trash. And if customers weren't vigilant, these kinds of charges could persist on their bill for years. But that's how these companies made money. Turns out a considerable portion of Jamster's revenue was being generated from customers that didn't even know they were customers.
With ringtones, what had originally begun as a fun new way to personalize your cell phone had quickly devolved into an oversaturated cesspool of an industry. For customers, there was almost nowhere to turn. During the height of the cramming era, every single entity from the ringtone companies to the cell phone vendors to the phone networks themselves were complicit in this diabolical cramming infinite money glitch that no one had decided to patch until someone did.
In 2007, Steve Jobs unveiled the iPhone, a revolutionary new product that would singlehandedly become responsible for dismantling the entire ringtone industry. And for many reasons. For starters, the iPhone allowed users to create their own ringtones with the songs they had purchased from iTunes. This would go on to create a really awkward moment in the industry where a 99-cent purchase from Apple could get you an entire song, while $4 from a ringtone company would get you 30 seconds of tea pain. But that's not all. The iPhone also spurred the launch of the App Store, a fully centralized marketplace of third-party applications that made Jamster's text-to-order service look like a goddamn Telegram. The rise of the App Store increased your phone's capacity for entertainment to a level that would make ringtones look like a tacky, outdated novelty. There was just so much else you could be doing on your phone now. Not to mention, as phone use became more widespread, texting just kind of became the norm, ultimately eliminating the need for an expensive personalized ringtone. No one calls anymore. you know this today the only people that call me are my good friends from Mumbai and Hong Kong. Thanks for calling guys. Thanks for checking up.
With the combined rise of the smartphone and the app store ecosystem, ringtone sales would begin to fall sharply after 2007. And it wouldn't be long after until the entire industry was put on silent. By 2013, Jamster had faded into obscurity. The music industry had lost another revenue stream, and the use of WAP had finally dried out. For the phone networks, it was bad news, too. In 2013, the public had finally managed to file enough complaints about unauthorized cell phone fees for the government to start digging. And boy did they find some dirt. Over the course of the next two years, virtually every major American cell phone company would be found guilty of facilitating and profiting off of cramming. A tactic they all actively knew was a scam. AT&T was fined $105 million. T-Mobile $90 million. Verizon another $90. Sprint $68 million. I mean, they nailed these guys. And thankfully, it worked. Today, mobile phone companies have learned from their mistakes and are now incredibly fair and trustworthy. [Applause]
Okay, so what can we learn from all this? Well, when it comes to the 2000s, I think it's easy to look back on the era with an almost irresponsible level of nostalgia. Sure, it was an exciting time. Technology was increasing at an incredible pace and for the most part companies were still trying to learn what worked, resulting in an era of ambitious experimentation. There was this sort of anything goes mentality. It was the Wild West. But do you know what else was a part of the Wild West? Lawlessness. In the West, you could steal a man's horse and get away with it. You could murder a man in cold blood, then move 50 miles away and just be fine. You could sell snake oil to a bunch of people that didn't know how to read and become a millionaire. And during the ringtone era, it was exactly the same.
The 2000s were a time when the primitive security systems of the internet combined with loose regulations and a general lack of digital literacy were ripe for exploitation. And while it was an exciting time for tech, it was also a time when phishing scams ran rampant, computer viruses were just the norm, and shady companies like Jamster thrived. I'll end with this. When the audio fidelity of cell phone speakers widely improved in 2002, it was proof of how even the simplest technologies could change the world. They could create entire new businesses, disrupt billion-dollar industries, and shape the way we created and consumed media. But when placed in the wrong hands, they could also be exploited and often times in ways we'd never expect. And that goes for anything from yesterday's ringtones to today's AI. It's a universal truth, if you will. One one that still rings true today. I'll see myself out. [Music] know I'm a goblin.