Feeds

Napster tunes into mobile ringtones

Even as parent Roxio's stock is downgraded

  • alert
  • submit to reddit

High performance access to file storage

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

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.