A ringtone is an excerpt of a musical composition embodied in a digital file and rendered into audio. Ringtones are stored in an end-user's mobile telephone, pager or other portable communications device and played whenever the device activates its ring or alert function (upon the arrival of a call, message or other notification).

There are two basic types of ringtones: Phonic Ringtones and Pre-Recorded Ringtones. Phonic Ringtones are, most commonly, standard MIDI sound files that are either monophonic, where the ringtones are recreated using standard single notes, or polyphonic, where notes can be played simultaneously creating harmony and/or counterpoint. Pre-Recorded ringtones play actual clips from sound recordings. It should be noted that the term 'Pre-Recorded ringtone' is not the standard term industry-wide. They are also known as Trutones, Songtones, Master Ringtones, etc.

No. HFA DPD licenses issued under Section 115 of the Copyright Act do not extend to the making or distribution of Phonic Ringtones or Pre-Recorded Ringtones. You need to obtain a specialized ringtone license for these uses.

After ringtone manufacturers sign HFA's licensing terms, publishers will receive a separate option letter with respect to each ringtone licensing arrangement offered through HFA. After the opt-in period is over and publisher-principal participation has been tabulated, licensees then submit ringtone license requests in electronic layouts (provided by HFA). The results files are returned electronically . no paper licenses are issued. Royalty reports are also submitted electronically.

Terms will differ for each deal, and are disclosed in each Opt-In mailing. The key terms of HFA's ringtones license program are as follows:

• The license includes the initial "fixation" of one or more copies of the ringtone on a central server or servers located in the United States that are owned and/or controlled by the licensee (basically, this means the ability to add a copy of the ringtone to their service). The company may stream a sample promotional ringtones to potential purchasers (the promotional ringtones are to be playable only once and must be provided to customers free of charge). Generally, there is a one-time server fixation fee.
• The license covers the distribution of Phonic Ringtones and/or Pre-Recorded Ringtones by the licensee, either directly or through a third-party retailer, for reproduction on mobile telephones, pagers or other portable communications devices operating on wireless communication networks. Generally, the provider pays a fee for each ringtone made.
• The license does not cover any performance rights, sound recording rights, synchronization rights, print or karaoke rights, or use of the ringtone to market or promote a product or service.
• The licensee is required to account and pay royalties to HFA on a quarterly basis.
• The licensee must implement and maintain a digital rights management system to enforce the use limitations under the license, as well as appropriate copy protection technology to prevent unauthorized reproduction and distribution of the musical works used.
• At the request of HFA, the licensee must permit HFA to examine operational systems and records to ensure compliance with the licensee's royalty and security obligations.
• Upon expiration of the license, any ringtones already distributed and any server copies already made by the licensee may remain in place, but there can be no further reproduction or distribution of any ringtones.

Ringtones provide a new licensing opportunity for our publishers' catalogs. HFA is committed to helping its affiliated publishers discover new sources of mechanical licensing revenue.

As ringtones are licensed, the usages will be reported on publisher statements as a licensing configuration code FX (FX for Fixation) and a rate code of N (negotiated). The phonic ringtone usages will be reported on publisher statements as licensing configuration code PH (PH meaning phonic) and a rate code of N. The pre-recorded ringtone usages will be reported on publisher statements as licensing configuration code RR (RR indicating prerecorded) and a rate code of N.

No. Licensees must request and obtain a separate license for each song that they wish to offer as a ringtone. A single license will not cover the all of the songs for a particular publisher, writer or catalog.

HFA. is committed to making available to our clients a comprehensive suite of services for new configurations as they are introduced in the changing music marketplace. The benefit to our clients is that they only have to deal with a single source for all their licensing, collection, distribution, and royalty compliance needs. Dealing with a single source, HFA, is less costly than managing all of these licensing services on their own. It is also less of an administrative burden to manage one point of contact as opposed to multiple requests from licensees.

Similar to publisher benefits - working with HFA reduces costs and administration. HFA negotiates and collects royalties on behalf of over 27,000 publishers. Otherwise, each ringtone company would have to reach thousands of separate agreements, and maintain thousands of separate accounts.

Lauren Apolito, Vice President, Business Development, 212-922-3225.

To our Legal Department by mail or fax, 212-922-3299.