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Bellrock Media gets a phone link

The Santa Monica-based content creator for the Net and mobile devices plans to announce its purchase of Moderati.

February 12, 2007|Dawn C. Chmielewski and James S. Granelli | Times Staff Writers

A Santa Monica company headed by a former show business deal maker plans to announce today the acquisition of a San Francisco firm that pioneered the use of popular songs as cellphone ring tones.

Bellrock Media Inc.'s purchase of Moderati Inc., which has relationships with all the major U.S. mobile phone carriers, underscores the entertainment industry's growing interest in distributing content to mobile phones. Terms of the deal were not disclosed.

Bellrock creates original programming for the Internet, mobile phones and other emerging distribution platforms.

"Moderati brings credibility and distribution with all the carriers," said Bellrock President Peter Levin, a former lieutenant of Creative Artists Agency founder Michael Ovitz.

Moderati's parent company, Faith Inc. of Kyoto, Japan, was an early provider of what the industry refers to as monophonic and polyphonic ring tones -- or distilled renditions of popular songs -- used through Japanese cellphone giants NTT DoCoMo Inc. and KDDI Corp.

After early success in Asia, Faith launched a U.S. subsidiary, Faith West, in May 2002. The subsidiary, whose name changed to Moderati in 2005, became the leading U.S. provider of polyphonic ring tones. Moderati has since branched out to provide snippets of actual songs, cellphone wallpaper and, recently, fake phone calls for Sprint Nextel Corp. customers who are looking for a way out of awkward situations, such as being approached by an unwanted suitor in a bar.

Research firm Gartner Inc. predicts that the global market for polyphonic and monophonic ring tones will peak at $7.1 billion this year, then slide to roughly $6 billion by 2010. Customers will pay much more for the actual recorded songs and ring-back tones, which are messages and music that customers arrange for callers to hear. Gartner expects that market to reach $6.6 billion this year and more than $26 billion by 2010.

Moderati President Carolynne Schloeder described the profit margins in the ring tone business as "famously challenged" because the music companies and carriers claim the bulk of the revenue. Although profitable, she said, the business is difficult to grow.

Schloeder said Moderati has been working to diversify its mobile offerings through new products such as its fake phone call service for Sprint, called Mobile Faker, and by seeking advertising sponsorships to underwrite the cost to customers. That's where the combination with Bellrock, with its relationships in entertainment and sports, makes sense, she said.

She met Levin when he approached her about doing a ring tone promotion with Gap Inc. last year. Schloeder, who will serve as Bellrock's chief operating officer, said her company had been unsuccessful at striking a deal with Gap on its own.

"It was clear to me the difference it makes if you know the right person," she said.

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