Feeds

Napster tunes into mobile ringtones

Even as parent Roxio's stock is downgraded

  • alert
  • submit to reddit

Choosing a cloud hosting partner with confidence

Napster is to enter the mobile phone ringtone market next year, launching an own-brand service on the back of mobile content delivery company Dwango Mobile.

The announcement comes after US market watcher PJ McNealy of American Technology Research (ATR) downgraded parent company Roxio's stock from Hold to Sell.

The Dwango deal will see the formation next year of Napster Mobile, a service pitched at North American consumers, initially selling ringtones, but presumably with music downloads in mind when the bandwidth's there to make it practical.

The more ringtones punters buy through the Napster-branded service, the more points they earn which can be used to offset the cost of PC- or music player-based track downloads. The terms of the deal were not disclosed, so it's not yet clear to what extent the deal will earn Napster revenue directly or whether it's more about getting mobile phone owners to buy song downloads or subscriptions from the company.

Revenue is one of ATR's concerns. In a report to investors, McNealy said parent company's Roxio's revenue forecasts did not justify the company's high share price, which was yesterday trading for almost $10, but closed at $8.67. Given the company's likely revenue expectations going forward, which will see its income come almost entirely from Napster, "we believe that ROXI's valuation is now too high... for a business that has not demonstrated profitability or tremendous growth rates", McNealy said.

Napster's - and thus Roxio's - performance ultimately depends upon paying-user numbers, something the company has to date been unwilling to put a figure to. Getting the number up in order to increase revenues to the point at which its current share price is justified will require gaining many more customers to buy into Napster's high margin subscription services. It's efforts to do so "have been limited by the number of devices that support the service and a lack of consumer understanding about why they should pay nearly $180 per year for access to music", McNealy said.

If BestBuy's promotional plans for Napster kick in as planned, and the number of compatible devices in use rises thanks to the Holiday sales period, Napster may be able to show solid revenue growth. But whether it will be enough to drive sales to four times the $35-40m it expects to record in the year to 31 March, FY2005, in order to justify Roxio's share price on the back of anticipated FY2006 revenues, remains to be seen. ®

Related stories

Napster UK song sheet passes 1m mark
Napster nips into newsagents
Wippit to gain over 1m major-label tracks
Musicians 'unconcerned' about file sharing
UK govt takes iTunes gripe to Europe
Shawn Fanning's Snocap touts vision of P2P heaven
Apple opens Canadian iTunes store
Apple iTunes adds Band Aid 20 - for 79p
Digital music download coin-op to offer 'all formats, all DRMs'
EMI looks to digital as download sales quadruple

Security for virtualized datacentres

More from The Register

next story
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Spies, avert eyes! Tim Berners-Lee demands a UK digital bill of rights
Lobbies tetchy MPs 'to end indiscriminate online surveillance'
How the FLAC do I tell MP3s from lossless audio?
Can you hear the difference? Can anyone?
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.