In a move to cash in on the growing ring tone market, Napster has announced that it has forged an agreement with Dwango Wireless to go mobile.
Napster will work with the mobile developer and publisher of entertainment content to launch “Napster Mobile” across major North American carriers. The service will launch in the U.S. and Canada next year and will include a specially designed Napster interface.
Ring tones don’t cost much — the price can range from 99 cents to US$2.50 and up — but the research firm IDC said ring tone sales should total about $325 million in 2005. IDC predicts that figure will skyrocket to $1.4 billion by 2008.
“Napster Mobile is a natural extension for the biggest brand in digital music and will enhance our development of wireless delivery,” Napster Chairman and CEO Chris Gorog said.
“Napster Mobile” will use an integrated solution extending from the PC to mobile devices by offering promotional offers for device users.
Napster Mobile customers will be able to choose ring tones that fit their lifestyle, musical tastes and mood from an extensive song catalog. The downloads will also earn credits for use on Napster’s full-featured PCservice.
IDC senior analyst Lewis Ward told the E-Commerce Times that the delivery mechanism will be key to the success of Napster’s latest venture. That’s because his research shows that roughly 85 percent of all ring tones in the U.S. are purchased through the handset.
“The big question is: will this be something that’s downloaded off a Web site initially or will this be available in the near-term on national carrier handsets?” Ward asks. “That’s the issue impacting how much revenue Napster is going to generate in the short-term.”
The long-term outlook is good, however, with billions of dollars in revenue on tap in the coming years. Ward said Napster has solid industry recognition to help it attract users.
Of course, Napster is not creating the content and so will only earn a slice of the revenue. The record labels will pocket the bulk of the sales.
“Part of the roughly 70 percent increase in ring tone sales in the next few years will be driven by an addiction to pop culture, and carriers are going to get better at delivering content,” Ward said.
“As record companies see their revenues decline, this new wireless delivery approach has the potential to grow from a tiny market to a big bright spot on their balance sheets. Media companies are going to put a lot of resources into promoting ring tones,” Ward said.