snapshot 5/2/08

And Now, the Ad-Supported Ringtone...
Forget about ad-supported downloads and streams for one moment. Because Burger King, Virgin Mobile USA, and Warner Music Group are now serving an ad-subsidized ringtone.
The ringtones aren't free, though the branding involvement of Burger King lowers the price to one dollar. "When the concept for an ad-supported ringtone promotion was first proposed, we jumped at the chance to participate with Virgin Mobile," said Perry Bashkoff, vice president of Digital Sales and Marketing at WEA Corp, the US-based sales and retail marketing division of WMG.


eFORCE Global Acquires gBox
eFORCE Global Inc. has acquired gBox, the music store that allows users to create embeddable “Wish Lists” and buy DRM-free songs as gifts for friends. eFORCE is a provider of professional eBusiness services with a focus on RoI. Under new ownership, gBox will continue to offer its music store and wishlist widgets, which we covered last year. gBox will also begin to offer a whitelabel version of the widget that will allow major online brands to label and sponsor these wishlists.


Look At Free Music, Look How It Drives Web Traffic To You….
According to figures release by Hitwise, the Coldplay website shot to the top of the rankings in the Bands and Artists category, with 52% of visits to the site coming via an email sent to registered fans. Exclaim News reports the single was download 600,000 times in the first 24 hours.

One song doesn’t make a revolution, and we’ve already seen experiments from other bands including Nine Inch Nails and Radiohead (the latter being a poorly executed publicity stunt). This sort of traffic does demonstrate some sort of tangible benefit for Coldplay, and therefore in favor of offering music for free. In Coldplay’s case they also insisted that those wanting the free single had to provide an email address, post/ zip code and country of origin; given just shy of 50% of those visiting the site for the free music weren’t registered fans, that’s around 300,000 new Coldplay fans now registered at the site (and still growing), 300,000 people Coldplay can now market albums, concerts and merchandise to.


Apple backpedals on 10m iTunes song claim
Apple has quietly backpedaled on its claim of 10 million songs in the iTunes catalog. Earlier this week, in touting iTunes' fifth birthday (the store, not the software), the company noted that its catalog contained more than 10 million songs, but since then the company has updated its own iTunes marketing to reflect the previously announced 6 million number.


DVD Kiosk Operator Redbox To File For IPO
Redbox, the distributor of DVDs via kiosk, plans to file for an IPO sometime during the current quarter, reports VideoBusiness (via NTV). The company, which is majority owned by publicly traded Coinstar, operates kiosks in over 5,000 locations across the country in stores like Walgreens and McDonald’s (which owns a significant stake as well). DVDs are rented at the simple price of $1 per disc per night (so no late fees, per se). The fast growing company is a Netflix competitor, though Netflix claims that it does more damage to traditional video stores, appealing to customers who mainly want a convenient outlet for renting hit titles. Unlike Netflix, the selection skews decidedly towards the fat head, rather than the long tail of films

Sans the S-1 filing, a look through Coinstar’s financial info provides a few details into the company’s business: In its latest quarterly, the company said it paid $5.1 million to up its stake from 47.3 percent to 51 percent, or 3.7 percent of the company. Technically, this values the company at $138 million, but as explained on its last quarterly earnings call, the purchase came from an earlier option, so that doesn’t reflect what the company’s actual market cap would be. In fact, Coinstar believes the company is worth somewhere between $400-$800 million.

On that call, management also provided some impressive financial info for Redbox: “… Looking at Chart 5, revenues in 2005, 2006, and 2007, were 12 million, $45 million and $133 million respectively. That adds up to a 233 percent top line CAGR over that period. And based on recent news of roll-outs or expansions with Wal-Mart (NYSE: WMT), Walgreens and others, we believe Redbox will have revenues of between $250 to $270 million in 2008. As we sit here today, we see the financial leverage in the Redbox business. Looking at Chart 7, during 2007 Redbox produced over $8 million in EBITDA and was net income positive for November and December. And for 2008 we believe that Redbox will achieve EBITDA of between 20 and $30 million implying an EBITDA margin of 10%, roughly 400 basis points above 2007.”


Universal Eyes Nimbit Investment, $3 Million In Negotiation
Universal Music Group is now eyeing a possible equity stake in Nimbit, according to paperwork secured this week by Digital Music News. Nimbit is a platform that allows artists to sell music and related assets - both digital and physical - across the internet.

Documents pertaining to the deal outlined a $3 million investment, and a total company dilution of $15 million. That fits into a number of other tech-related investments triggered by the major label, though the fate of this specific deal remains cloudy. Correspondence between the parties suggest a considerable level of buy-in from upper management, though one well-placed source at Universal expressed serious doubts about the chances of a finished agreement.