Omnifone goes into profit in last financial year

By | Published on Wednesday 12 September 2012


Omnifone, the back-end digital music provider that pumps music into services run by the likes of Sony and Blackberry, as well the streaming platform launched by its own spin-off company, has posted its first annual profit in its nine year history.

The London-based digital firm yesterday announced that it made a £2.9 million profit in the last financial year, compared to a £21.7 million loss the previous ear. Of course, given the investment in technology, licensing and business development made in the last decade, the company is presumably someway off truly going into profit, though when operating in a market dominated by companies still wholly reliant on start-up capital, being a profitable business year to year is worth bragging about.

Which is what Omnifone did yesterday. CEO Jeff Hughes told CMU: “We have experienced fantastic momentum on all fronts over the past year and have achieved profitability as a result. The growth of smartphones, connected devices and the availability of high speed connectivity has led to an increased demand for cloud-based music services, opening up a land grab opportunity for the digital music industry”.

He added: “Our success is proof to the industry that the business-to-business model has the potential to be profitable. Scale is important and having achieved profit at scale our aim is to focus on growth across all areas to take the business to the next level. Our sights are set on new market expansion, business development and market consolidation”.

As Hughes says, Omnifone’s primary business is as a B2B provider of content and technology to other consumer-facing digital services, usually operated by existing major brands. And while the company’s own MusicStation brand has been used by some the company’s clients, when the Omnifone team moved fully into the consumer-facing part of the market last year, they did so by setting up as a separate entity.

The B2B model isn’t new of course, and in the early days of digital music it was the back-end providers that seemed to enjoy most success, partly because their clients took most of the risk associated with launching a loss-leading download or streaming service. That said, few of those providers lasted the distance.

Whether yesterday’s news means Omnifone is the company that has a long-term future in this space is something industry experts will debate. Though the inevitable shift of digital music to mobile devices should given Omnifone further competitive advantage given that, while the company has worked with various web and PC-based music services over the last nine years, as its name suggests the firm’s ambition has always been in the mobile music space.