UPDATE & ANALYSIS: Proving once again that new technologies can monetize music and content in ways that we have barely 
imagined,Internet phone service Skype has inked with Warner Music to sell ringtones for the home. Skype which is owned by eBay 
will sell songs in much the same way that cell providers do - as replacements for traditional sounds downloaded for a per song fee.
Madonna will be the first featured, but soon Skype's registered users will be able to draw from Warner's large stable of artists. Users will access a special online store which will include both ringtones and other music-related content. Skype software has been downloaded 245 million times, but it is estimated that there are 5-7 million active users.
Skype and Warners entering the ringtone market should not be not surprising given that ringtone sales worldwide hit $4 billion according to research firm Yankee Group and represented about 10 
percent of the global music market.
ANALYSIS: Skype's active user base is a mere 5-7 million, but total VOIP (Voice Over Internet Protocol) users worldwide have hit 70-90 millions and are expected to rise to 250 million or more in the next few years. That is a significant base of potential revenue for the music industry, but perhaps just as importantly VOIP users are early adopters and trendsetters whose musical choices influence others. "What was that cool song I heard when I called you?" (...or was waiting on hold") is incredible viral marketing. A creative marketer might even consider giving away 60-90 second song samples as ringtones to spread the word on a new band or release. And if 
VOIP and cell companies are offering ringtones; can traditional wired phone providers be far behind.
WMG deserves credit for being among the first record labels to tap the VOIP market (EMI's Coldplay is currently involved in a promotion with Skype for their new single "Talk"). This move by Warners comes hot on the heals of their successes with Madonna who used the net so effectively that she hit the #1 spot in 29 countries simultaneously in 2005 despite receiving 40% less radio airplay than the average #1 single. (Read the full Hypebot story here.)
