While this is a step in the right direction, keep in mind that you are charged a fee ($.99) each time you make a ringtone and also, only files that you have downloaded via iTunes are compatible with this method. There were early workarounds for this, but many have since been fixed in the latest version of iTunes (184.108.40.206).
Despite these setbacks, end users still have a few options they can use to create custom ringtones. I will be covering one of these methods here today, and show you how to make ringtones that don't sound absolutely terrible via the iPhone's speaker.
iBrickr is one of a few programs that allows Windows users to customize their iPhone. With this program, you can add custom ringtones, add/edit iPhone sounds (like that highly annoying "Text Message Received" sound clip that is way too quiet) and also add/edit applications and files. For the purpose of this article, we will only be using the Ringtones section.
The first step is to select an MP3 that you would like to use as a ringtone. Next, open MusicMatch Jukebox...
...then go to File, Convert Files.
Select your source file in the bottom left box. Be sure that Source Data Type is MP3 and Destination Data Type is .WAV, then click Start.
Now, open Sound Recorder (Start > Programs > Accessories > Entertainment > Sound Recorder) then open the .WAV file you just created. Use Sound Recorder to trim the file to your liking (Edit > Delete Before Current Position and Edit > Delete After Current Position). Now comes the most important step of the process.
Before saving your modified file, click Effects > Decrease Volume. Do this two or three times. Then, save your .WAV file and close Sound Recorder.
Go back to MusicMatch Jukebox's Convert File section, and select Source Data Type as WAV and Destination Data Type as MP3. Select a bit rate and click Start.
Head back over to iBrickr and select the Ringtone link. Click Upload Ringtone, select your file and click Open. iBrickr will convert and upload the ringtone to your iPhone.
You may need to restart your iPhone for the ringtone to show up in your list.
I have tried this method with several different MP3 files and have found this to be the easiest and most effective method. My initial problems were with the ringtones overpowering the crummy speaker, but doing the Decrease Volume trick in Sound Recorder eliminates 99% of the overpowering sounds and leaves a crisp, clear ringtone that works great!
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