* Some people don't know how to put ringtones on their phone. Maybe their phone can only accept over the air ringtones unless they buy a special cable.
* Companies provide a service to send people ringtones.
* Both parties are happy
The (some might say) fraudulent bit is companies that get users to sign up to an automated subscription payment to get ringtones - eg "Get a free ringtone when you sign up" (Small print: subscription costs £3/month and allows you up to 5 ringtones per month).