Feeds

Backroom music streamer Omnifone palms first profit

Stuffs wallet with Sony and BlackBerry cash

Designing a Defense for Mobile Applications

Privately owned music services pioneer Omnifone boasted its first ever annual profit this morning. The company provides a platform for streaming services including that of Sony (Music Unlimited) and RIM (BBM Music) and operates in 28 markets. Omnifone was founded in 2003 and launched its first service, MusicStation, in 2007. It has notched up several firsts, including the first cloud streaming service and the first licensed scan-and-match service.

Omnifone says it will book a profit of £3.8m (EBITDA) in the year ending 30 April 2012, on revenue of around £29m – or £2.9m profit after tax. The company has soaked up some heavy losses in recent years. The company employs around 200 people, and CFO Matthew Bagley said the cost base was around £20m per year. Omnifone booked hefty losses over the past two years - around £16m in 2010 and £22m in 2011 - but is starting to see real revenue from its global deals. It now expects the investment in the platform – which totals £60m in five years – will start to pay off.

How so? While Omnifone says it's "98 per cent" ready to handle other media formats including video and books, and may make acquisitions, it expects most of the growth to come from the increasing popularity of music streaming. It's the fastest-growing part of the music market – but that's starting from a very low base. Only around 10 to 12 million people in the world currently subscribe to Spotify or a similar service.

Industry analyst Mark Mulligan is more skeptical. He doesn't think there's a mass market for £9.99 (or $9.99) subscription services.

"Spotify has got this artificial adrenaline shot from Facebook - but it's a market which will be saturated soon," he said. He added that there was more hope for bundling streaming services in with other products or services.

Omnifone CEO Jeff Hughes didn't think it was an insurmountable challenge. "We're saying the market is going to [go] from 12 million to 80 million subscribers globally in five years," Hughes insisted.

Some major areas have been overlooked. Digital streaming services have so far largely ignored car drivers, and digital radio has failed to sweep analogue radio aside. As a result, drivers are still listening to music on FM radio, their CDs, and cached music collections on iPhones and iPods. There's lots of opportunity there, and faster mobile networks can help.

Hughes said that publicity for Spotify gave Omnifone a lift – since Spotify's success validates the market – and others want in. ®

Using blade systems to cut costs and sharpen efficiencies

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple ran off to IBM
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.