Ringback tone specialist adds more heft to its content arm LiveWire with Groove’s mobile music platform

NMS Communications said today it has acquired mobile music company Groove Mobile for $14.5 million, allowing NMS to expand beyond ringback tones into full track music downloads. NMS plans to integrate Groove’s music distribution platform into its new LiveWire Mobile subsidiary, creating a managed services portfolio that will span ringback tones, ringtones and video downloads and now full-track song downloads.

Groove Mobile powers the Sprint mobile music store in the US and runs an off-deck music service with operators in Europe. Most recently, Groove has taken a crack at the off-portal market in the US, distributing music from independent music label aggregator The Orchard through premium SMS transactions. Groove initially launched with a single promotional track but had planned on expanding the service into a full-fledged store offering millions of songs via short code and a mobile Web site. Whether NMS will continue Groove’s off-deck plans remains uncertain, as it doesn’t gel with the new carrier-oriented strategy NMS is pursuing.

NMS has been trying to transform itself from a technology vendor into a managed services provider, offering up music services rather than music servers to its carrier customers. When it launched LiveWire in December, the company unveiled a strategy to become a purveyor of personalization services it could host for its carrier customers. Instead of selling ringback tones and video delivery infrastructure, LiveWire would create an integrated platform to deliver those services to carrier customers as a unified offering, allowing operators to sell personalization services instead of individual ringtones or ringback tones.

“Now it’s just music, but it could be graphics, video, anything,” said John Orlando, vice president of marketing for LiveWire. “We can offer much more—the integration of bundles of personalized services and themes.”

The phone and service personalization market, however, is a rapidly evolving one. The business models that originally built the ringtone and ringback tone markets may give way to new models built on the same Web 2.0-based applications that have swept the wired Web. The current model is for mobile distributors and content platform providers to license music, pictures and video from entertainment companies; turn that content into a ringtone, wallpaper or animation and sell it to the customer either as a one-off transaction or as a subscription. Customers have freedom to customize their phones and service, but they must use the licensed content that the carrier and ultimately their content platform providers sell them.

A host of new companies are emerging that are turning that notion on its head, selling personalization as a service rather than selling individual pieces of personalized content. Vidiator, for instance, is developing online customizable avatars that can be built in a Web engine and then uploaded into a device. Those attach themselves to numerous customizable functions on the phone—becoming screensavers and wallpapers and even embedding into multimedia messages sent to other devices.

Vringo is taking the concept one-step further. It offers licensed content from the Cartoon Network and its Adult Swim programming, but it also integrates into social networking and Web 2.0 applications on the wired Internet. Instead of using prepackaged content distributed specifically by the operator or one of its content partners, the Vringo engine allows customers to take video, audio, avatars and other animations developed on sites like MySpace and Meez and upload them to the phone where they can be combined with ringtones, ringback tones and other video sharing apps.