Mobile media company mSpot today said it has created an application that will allow customers to edit music ringtones on their phones, allowing them to pick and choose the elements of a specific song they want to play over their handsets rather than settle for the pre-packaged ringtone sold by the carrier or record company.

Ringtone sales have been declining in recent years as the once-hot segment has lost some of its allure, mSpot CEO Daren Tsui said, but new technologies that allow customers further customization and personalization options will help revitalize the space. “You’ll no longer have to buy the canned ringtone that your carrier sells you,” he said.

The application runs as a Java or BREW program on the phone, running a simple editor that draws a song from the network and renders it as a waveform on the phone screen. The customer can listen to the corresponding song, setting start, end and duration parameters along the waveform. Once completed, the application downloads the customized and rights-protected ringtone from the network, and the operator bills accordingly.

mSpot is certainly not the first company to pursue ringtone editing and customization. Several companies such as XingTone have created downloadable and Web-based applications that allow people to create their own ringtones on a PC. Most of the companies, however, bypass the carrier fees and record labels’ royalties, charging their own fee for licensing their software. ID Interactive has joined the technology with digital rights management, teaming up with bands like Linkin Park and media aggregator mBlox to allow customers to create a customized ringtone online and ship it to their phone.

Tsui, however, said mSpot’s Make-A-Ringer application is the first designed to work entirely on the phone, making the process of discovery, customization and purchase an entirely wireless event, thus conforming to the way most people buy ringtones. The service also brings carriers directly into the equation, instead of bypassing them entirely or limiting them to a third-party transaction in the case of ID Interactive.

The application is built, but mSpot isn’t yet offering it commercially. It is simultaneously negotiating licensing deals for the record companies’ digital master tracks as well as looking to sign its first carrier customer. The carrier side isn’t difficult, Tsui said—two Tier 1 carriers are already interested—but dealing with the labels is a bit more arduous.

“It’s like pulling teeth,” Tsui said. “They’re more open to mobile music, but it’s still very onerous dealing with [the record labels]. I don’t blame them. They’re very protective of their music.”