Today MIDiA Consulting is proud to announce the release of a white paper commissioned by Universal Music entitled “Building the New Business Case for Bundled Music Services”. The report, written by myself and MIDiA Consulting co-founder Keith Jopling, provides an unprecedented analysis of telco music services, taking a critical look at what has and had not worked to date and a series of models and recommendations for the future. We interviewed a host of telco music executives to get a deep understanding of what telcos need out of music services to make them a success and combined this insight with data from consumer surveys and music service trials as well as case studies and best practices. We think it is pretty much the definitive piece of work on the topic (!) and we invite you to download it here: Building the New Business Case for Bundled Music Services – FULL REPORT. You can also download an executive summary version of the report here: Building the New Business Case for Bundled Music Services – EXECUTIVE SUMMARY.
Here are some of the key findings of the report.
The consumer shift from downloads to streaming is the most important digital music market trend since the advent of the iTunes Music Store. Before streaming services telcos struggled to find a way in which they could compete in a market dominated by Apple, restricted to selling DRM locked downloads that of course would not play on Apple devices. Subscription services changed all of that, with the leading streaming services all pursuing robust telco partnership strategies as well as a number of download subscription services. There are now nearly 50 telco music service partnerships live in six regions across the globe. With 40% of streaming consumers now paying to stream, generating $1.2 billion in trade revenue in 2012 the opportunity is clear.
However it is clear that many of the hurdles that telcos faced in the last decade continue to pose challenges. These include music not being a priority for many telcos, internal business casing getting in the way of building compelling services and the wrong success metrics being used.
The new success stories of telco music services are those that make music a strategic priority. This is not some sop to the record labels, but a reflection of what it takes to make music strategy a success. If a telco just adds music to a long list of Value Added Services (VAS) it will wither on the vine. But if a telco puts a music service front and centre and positions around it then success is far more likely. Success stories that have followed this approach include Telia Sonera’s hard bundle with Spotify in Sweden and Cricket Wireless’ Muve Music in the US.
The Role of Promotional Offers
For all the obvious synergies of telco music bundles there is a real danger that hard bundles that make music subscriptions free or feel like free to the end user run the risk of devaluing the proposition. Yet it is also clear that consumers need to be able to ‘suck it and see’ before subscribing so promotional free trials and limited period bundles present a strong balance of value to the consumer, cost effectiveness to the telco and protecting the integral value of music for artists and labels. The market data for free trial is compelling: half of one month trialists convert to a paid subscription at the end of the promotional offer period.
Customer Satisfaction, the New Music Service Opportunity
An entirely new aspect to music bundling that we dive into in the report is the role of music subscriptions in driving customer satisfaction across a telco’s wider business. Even the most edgy, cleverly positioned challenger telco is ultimately a provider of important products but not usually a consumer passion point. Music though has that brand passion secret sauce and partnering with the right music service can enhance the telco’s own brand and customer sentiment. Smart integration of music into the customer journey and integration with customer satisfaction measurement tools, particularly Net Promoter Score (NPS) can enable telcos to create a customer satisfaction halo effect. With music converting satisfied music subscription customers into highly vocal net promoters with satisfaction benefits felt across the full range of a telco’s services.
Bundled music services did not get off to the best of starts, but now their time has come, giving telcos the opportunity to assume centre stage in the digital music marketplace.
For more information on the research please feel free to email us at info AT midiaconsulting DOT COM.
About MIDiA Consulting
MIDiA Consulting is a boutique, media industry focused consultancy that delivers practical, results-driven outcomes. MIDiA stands for Media Insights & Decisions in Action. Our mission is to help media and technology companies develop purposeful strategies quickly through market understanding, clarity of vision, and workable innovation.
We help media and technology companies make sense of the changes that digital market forces are bringing about. And we help them make profits from digital content.
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Will we see music streaming services bundled with our mobile/data subscriptions soon?
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Great post. Will def be interesting to see what happens and whether it will happen here in Australia. You thoughts? Cheers, Sue