Ring tones? VeriSign?
By JOHN J. LUMPKIN

Do you Jamster?

That's what VeriSign Inc. hopes people under 30 will be asking each other when the company launches Jamster, its U.S. ring-tone service, in the first half of 2005.

Ring tones? VeriSign?

The Internet company, best known for technology that secures one-third of the nation's online transactions, has tapped into a new growth engine by recently acquiring a European company called Jamba, which provides ring tones to cell-phone service providers.

Carriers offer the service to subscribers who want to listen to the latest hit song every time their phone rings. In the U.S., the service is marketed under the Jamster brand name.

"Everywhere I go, investors are asking about Jamba," said VeriSign Chief Executive Stratton Sclavos, who visited CBS MarketWatch's offices this week. Watch a video interview with Sclavos.

Although VeriSign reached the Jamba deal last June, it's only in recent weeks that investors have begun to take an interest. Jamba's growth potential has been cited as a major factor propelling VeriSign's stock about 80 percent higher since mid-October. The shares were up 32 cents at $33.28 in Wednesday afternoon trading.

Jamba's sales of ring tones and even screensavers of some of the more popular artists totaled $75 million (mainly Britain and Germany) in the third quarter. Revenue next year is estimated at $380 million to $400 million of sales, or nearly a third of VeriSign's estimated total sales, according to Sclavos

"Jamster" doesn't mean anything in particular, but it's partly a twist on the original name Jamba, said Sclavos. The name may also remind some people of Napster, the music-swapping service that appeals to the same young demographic Jamster is targeting.

If Sclavos has his way, Jamster would become part of the vernacular in the way Google has, as in, "Have you Jamstered your phone?"

Sclavos says Jamba, which is advertised on MTV Europe, has proven popular with 14-to-29 year-olds. When music videos are played, a five-digit code pops up on the TV screen. That code can be typed into a cell phone to get the song automatically downloaded.

About 80 percent of European subscribers pay for the Jamba service as part of a bundled subscription service.

In the United States, VeriSign has been testing subscription plans of $1.99 a week for up to three song downloads with T-Mobile, AT&T and Cingular.

Since the service will just be launching in the U.S. market in the first half of next year, Jamster isn't expected to be a big contributor to Jamba revenue until 2006.

The carriers are receptive. "Voice plans are getting competitive and carriers need incremental revenue," Sclavos said.

The model in the U.S. is similar to that in Europe. Consumers pay a subscription to their cell phone carrier providers. That subscription is divided among VeriSign, the content producers and the carriers. Carriers receive 30 percent of what consumers pay. Producers of the content get between 12 and 15 percent while VeriSign keeps the rest.

Jamba is the second-largest advertiser on MTV Europe, spending $8 million to $10 million per quarter, Sclavos said. VeriSign is already promoting the service on MTV, a unit of Viacom . Viacom is a significant investor in MarketWatch Inc., the publisher of this report.

By the end of 2005 and 2006, Sclavos said that VeriSign plans to broaden its offerings into video clips. "Categories could include sports, movie trailers, news on selected topics, music videos, etc.," Sclavos said. "This would be an extension of the current Jamba platform. The service will be launched when we feel the networks are fast enough and there are enough multimedia-capable handsets."

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