MUMBAI: According to a new study by Informa Telecoms & Media, mobile operators should quit pushing their own music download stores on users and instead partner with music streaming services to increase revenues and build customer loyalty.
The study reports that a typical Western European carrier with around 20 million customers could see revenue rise to $109 million per year from new users. Revenue saved due to a decline in churn would also contribute to that figure, said the research.
While many mobile companies have assumed that imitating Apple’s download model will bring success, the study indicates that carriers may have a new viable model that’s both beneficial to their customers and their bottom lines. It’s a great sign for third-party streaming services such as Pandora, Spotify, and Rhapsody, which are trying to break into the mainstream with their ad-supported models and premium subscription plans.
Unlike music download services where tracks are stored in one place, streaming services are suited to work on several platforms. The study cites successful examples of operators such as Denmark’s TDC, South Korea’s SK Telecom and Swedish TeliaSonera who offer their own streaming services or, in the case of TeliaSonera, partnered with Spotify. The companies managed to reduce churn and increase mobile data revenue by offering music streams that work on a range of devices, the study
said.
While music as a whole is expected to account for only a small portion of non-voice revenue it is seen as a value-added service that can help operators to gain market share and sell more high-end smartphones.
The study also mentioned that mobile streaming services require the user to have a high-end device hence it is crucial for operators as one of their key aims is to convert feature phone customers into users with more profitable smartphone customers.
Most sites are free for users and they have tried to build a big audience so they can earn money by selling display ads. That business model has largely failed because of the high license fees the sites must pay to music labels, so now most streaming services, notably Spotify and Deezer, are trying to shift users to paying for subscriptions.