Mobile Entertainment

Marx famously said that history repeats itself first as tragedy, second as farce, and you have to wonder if the guardians of the D2C business are aware of the quote.

Earlier this week AT&T reached a settlement in a class action suit brought by many of its customers for unauthorised charges from dodgy ringtone sellers.

Lawyers for the aggrieved subscribers said ominously: “This should put a lot of pressure on other carriers to demonstrate that they, too, are serious about their customers’ welfare.”

It will all be painfully familiar to European readers – especially those who were in the industry back in 2006. That was meltdown year for ringtone merchants as regulators, mainstream media, government and consumers finally got sick of (at best) misinformation and (at worst) theft. The industry all but disappeared after the resultant crackdown. It still hasn’t fully recovered.

Although other countries were less affected, the trauma did force the market’s leaders to re-invent themselves. Thus Zed moved into social networking, Buongiorno bought Flytxt for a move into marketing services and Dada drove into full track music. Meanwhile we wait to appraise the integration of Jamba with various Fox and MySpace assets.

They all still sell ringtones and wallpapers, of course.

And each one reports growing demand for these basic personalisation products in developing markets. One US D2C company told me this week that subscribers are growing 100 per cent a month in Brazil.

Great. But what worries me is that the pattern of ‘growth, regulation, collapse’ will be repeated in every new territory until there are none left. If so, that’s not very clever is it?

To be honest, I’m not hopeful. Experience suggests that unscrupulous start-ups will always emerge in new markets – and in some cases the established companies won’t be blameless either. And, doubly worrying, even regulated markets are slipping back to old habits.

Just weeks ago, UK regulator PhoneplayPlus said it received more than 4,500 complaints in 1Q08 – a 40 per cent year on year increase.

It seems like there are some merchants out there who adhere to another Marxist quote, this time from Groucho: “Those are my principles, and if you don't like them... well, I have others.”