InfoSpace loses carrier contract, faces downsizing

One of InfoSpace's large carrier partners has served notice that it will not renew its ringtone contract with the company next year. Analysts believe that Cingular is the carrier in question, InfoSpace's largest account. This means that 30 percent of InfoSpace's revenue and 20 percent of its operating profit is now at risk. The company is expected to announce a "downsizing" plan in the next month.

Mobile content aggregators like InfoSpace are certainly in a tight spot, as carriers form more direct relationships with record labels for their ringtone sales. This is one reason behind the company's Moviso direct-to-consumer play. But of course, any D2C play means much higher marketing costs. Additionally, many record labels actually outsource the creation of their ringtones to InfoSpace as well. The company has expanded its content portfolio to include games and other content.

For more on the InfoSpace story:
- read the Needham analyst report