Integrated desktop and mobile marketing solutions provider W3i announced the sale of Ringtone.com and its assets to Atrinsic last week. Atrinsic, an Internet media and mobile entertainment company, will pay W3i $6.25 million in cash, including $1.5 million in working capital. In addition, W3i will receive a $1.75 million convertible note, with a 10% coupon and a term of one year.
“In line with our strategic intent to be the market share leader in the Integrated Interactive Media Industry, the sale of Ringtone.com will allow us to focus on our core business,” said W3i CEO Andy Johnson, in a statement. “Our strategic focus is to continue to develop additional services that enable low cost distribution of quality content and information.”
Atrinsic said that, based on existing subscribers and historical retention rates, it expects Ringtone.com to generate a higher return on the company’s marketing investments than if it had organically acquired these customers during fiscal year 2008. The company also said it expects to expand the use of assets purchased from Ringtone.com “from solely a subscription based model into a more flexible and robust business model with multiple revenue streams, including an ad-supported model.”
Burton Katz, Atrinsic CEO, said in a statement: “Ringtones are the historic growth driver behind worldwide mobile content sales. Over the past year and a half, there have been fundamental shifts in the subscription-based business model supporting these services creating unique opportunities in a business continuing to see strong consumer demand. This accretive asset purchase enables us to re-enter the ringtone space, in what still represents an approximate $4 billion global business, with a low-cost platform that will leverage the popular ringtone.com domain and implement a new, ad-supported business model.”