Sasha Frere-Jones in the New Yorker:
In 1997, your cell phone could make two kinds of sounds. It could “ring”—our anachronistic word for the electronic trill that phones produce when you receive a call—or it could play a single-line melody, like “Für Elise.” If you’ve ever heard a cell phone bleep out Beethoven without the harmony, you’ll understand that this wasn’t much of a choice. At about this time, Nokia, the Finnish cell-phone company, introduced “smart messaging,” a protocol that allowed people to send text messages to one another over their phones, and Vesa-Matti Paananen, a Finnish computer programmer, realized that it would work equally well for transmitting bits of songs. Paananen developed software called Harmonium that enabled people to program their cell phones to make musically complex sequences—melodies with rudimentary harmonic and rhythmic accompaniment—that they could forward to friends using smart messaging.
…ringtones generated four billion dollars in sales around the world in 2004…In 2004, the Korean ringtone market was three hundred and fifty million dollars, while the CD market for singles was just two hundred and fifty million…
More here.