Taken from the Telegraph Business pages, I have highlighted particularily amusing sections in frog green.
Crazy Frog, crazy business
(Filed: 22/05/2005)
Guy Dennis shows how a frog spawned in a Swedish teenager's bedroom has become an international earner for a Nasdaq corporation
Erik Wernquist apologises to the people of Britain for what he has inflicted on them. "This," he says "was never my intention."
Few people have heard of Wernquist, a 27-year-old Swede, but even those who haven't may still appreciate his gesture. He - perhaps more than anybody else - is responsible for the Crazy Frog.
In the past few months, this animation, with its associated mobile-phone ringtone, has been sweeping, and irritating, the nation - as well as at least 17 other countries. In the past two weeks, the frog's signature "beh-ding ding ding" tone, combined with the Axel F tune from the Beverly Hills Cop film, has even been advertised on prime-time ITV1. Tomorrow, a single will be released featuring the frog and its maddening noise.
If Lara Croft made computer graphics sexy, then the frog has made them annoying. But what it has also done, if you unravel its DNA, is demonstrate just how much the media has changed, and is changing, in ways that some incumbent well-paid executives may find even more unsettling than the creature itself.
The story of the frog starts in 1997 when Daniel Malmedahl, a Swedish 17-year-old, recorded his impersonation of the sound made by the two-stroke engines of his friends' scooters. His recording raised chuckles, and he put it on the internet, and was even asked to perform it on Swedish tele-vision.
For years, members of the online community who surf the web for fun, found it and laughed before telling their friends. The recording grew increasingly popular and, in 2001, was used in the Insanity Test, an online joke. If you could listen to the sound and stare at a picture of a red Formula One car for more than 60 seconds without laughing, you passed the test: you were clearly insane.
In 2002, Wernquist, a designer of 3D-graphics, took the test and chortled. He didn't know where the sound came from but, using his computer skills, he spawned the frog character, which he called The Annoying Thing, and created an animated cartoon which he posted on the website of his company, Turbo-Force 3D, where it is still available free of charge.
In fact, Wernquist never intended to make money from the frog, let alone start a ringtone craze. "That was definitely a by-product," he says. "I had this funny sound on my hard drive which was around some years ago and, when I had enough time, I thought it would be fun to make a character that looked like the sound and mimed to it. So I made it."
When he created the frog, he did not even know who had made the noise. His website included a request for the creator of the sound to contact him. A friend of Malmedahl's saw it and put the two in touch by phone. To this day, Wernquist and Malmedahl, who now sells computer components, haven't actually met.
It was only in 2004, that a worker at Jamba!, a German ringtone company, spotted its popularity on the internet and put it forward as an idea to his bosses. Markus Berger-de Leon, chief operating officer of Jamba!, says: "All of us saw it, the whole executive team, and we thought 'This is going to be big'." They approached Wernquist and Malmedahl and bought the rights.
At about the same time, Jamba!, which trades under the Jamster! brand, was bought by VeriSign, an American internet company, for about £152.5m in May last year. The frog had jumped from a 17-year-old's bedroom to a Nasdaq-listed US corporation with a market capitalisation of more than £4.3bn.
Jamba! really started pushing the frog as a ringtone and mobile-phone screensaver. It has now been launched across Europe. "Wherever we have launched, it has been number one in the ringtone chart," says Berger-de Leon. "We are working on this 24-7."
Berger-de Leon refuses to discuss the sums that Crazy Frog has generated, as does Wernquist who, along with Malmedahl, receives a cut. Some media reports have speculated that froggy turnover in the UK alone has been £10m already. Accurate or not, the figure is still rising.
"It's made a fortune," says Matthew Pearson, telecoms analyst at Investec, the stockbroker. "It's got to be tens of millions of pounds in revenues across Europe. Half of our traders download it purely to be annoying."
Even so, Wernquist is almost confessional when it comes to the frog's ubiquity. "I guess I knew it was annoying from the beginning," he admits. "In Sweden, we are not so infiltrated by it. I mainly watch public-service TV and it's advertising-free, so I don't have to see it. But I understand - I totally understand - that it's annoying for everybody who has to see it."
Berger-de Leon, however, is far more corporate. "I'm the chief operating officer of Jamba! so you could say I am in charge of it." Does he find it annoying? "Certainly not," he claims. "I still think it's great."
Anyway, the frog teaches two business lessons. Its success relied on the pairing of the internet and mobile phones. Without the web, the sound would probably be languishing on a tape somewhere. And, while advertising played a role, the frog's success was built largely on the viral marketing of teenagers texting one another.
What is more, no shops have been involved. The frog has been sold direct via SMS text messages and over the internet. Nor did it originate in the expensively staffed creative department of a large media company. The sound had been available on the internet for years without a single media company exploiting its potential until Wernquist built his character for a laugh.
Indeed, the frog illustrates one of the most striking aspects of the mobile-phone-content business: the way it is evolving outside of traditional media companies rather than within them. The UK provides three examples: iTouch, Monstermob and Opera Telecom.
Interestingly, all three companies also have something else in common: the role of newspaper owners in their development. iTouch was sold for £180m to a Japanese rival last month, at which point Independent News and Media, which owns the Independent, had a 37 per cent stake valued at £66m. INM made a profit of about £50m on its initial investment.
Meanwhile, Monstermob, whose shares have risen 49 per cent over the past 12 months, is 8 per cent owned by Sir David and Sir Frederick Barclay, who own this newspaper. And David Sullivan, who owns the Sunday Sport newspaper, owns about 20 per cent of Opera Telecom, which has recently been trying to sell itself for more than £100m.
Even Wernquist is bemused about the frog's success: "I don't really understand how the frog can be so successful." As he points out, most of the sounds and animations are free on the internet, although not in a mobile phone format.
But the frog is a manifestation of a rapidly growing market. Jupiter Research, a consultancy, estimates that worldwide spending on phone ringtones and logos will rise sevenfold from €505m (£348m) in 2003 to €3.7bn in 2007. Based on this and other research, Pearson, at Investec, estimates that mobile-phone companies in the UK earned £400m from so-called data services in 2004, up from about £180m in 2003, boosted in part by the frog.
The frog's success has not been trouble-free, however. Earlier this year, the Advertising Standards Authority, the UK regulator, revealed that it had received 60 complaints about television adverts for the frog. The nature of the complaints is best left to the ASA's own brand of po-faced statement that features in its adjudications.
"Viewers felt that Crazy Frog itself was inappropriate, as it appeared to have genitals. Twenty-two of the complainants were concerned that children might see the advertising. Five parents were embarrassed by questions their children had asked. A number of the viewers also found the commercial annoying and broadcast too frequently."
Although the ASA rejected the complaints, the frog's froghood has been covered up in adverts. This, more than anything else, annoys Wernquist. "I think it's kind of sick, actually. I don't understand why you would want to do that," he says. "I mean it's a tiny, tiny blue little thing that's hardly even recognisable. It's not like it's erect, it's just there as a natural piece of the character. When I created it, it was obvious that he needed something between his legs."
