Telco Music Strategy Ironing Out The Strategic Kinks As Objectives Evolve

The 20,000 Foot View In a few short years telco music bundles have gone from a useful ancillary revenue stream to a core component of the streaming landscape. Despite long standing issues about how success can best be measured, telcos continue to invest heavily in music deals that are unlikely to ever deliver direct profit but that instead help drive metrics across the rest of their businesses.  Meanwhile streaming services get otherwise unobtainable marketing support and rights holders get large revenue guarantees.  On the surface it is an everyone wins situation.  But under closer scrutiny it is clear that there are structural and partner issues that must be addressed if bundles are to remain a vibrant business stream.

Key Findings

• The number            telco music bundles has more            doubled, up from            live partnerships            July 2013 to            in October           
• Telco bundle            is into its third phase            Innovation, following Experimentation and then           
• Label, telco            streaming service objectives are not            aligned and sometimes there are            conflicting priorities
• A degree            mistrust exists between telcos and           
• Streaming services            placing greater importance on telco           
• Activation rates,            differentiation and weak channel support            three priorities for bundle strategy
• The four            innovation focuses are mixed bundles,            bundles, alternative products and emerging            products
• There were            bundled music subscriber accounts in            representing            of all global subscribers.            will grow to just
           million at the end of 2015 with subscribers lost from Muve Music and other bundles offsetting growth else where
• Breakage licensing            are a key area of            with labels remaining firmly wedded            the approach and telcos and            services pushing for usage models
• Labels, publishers            music services need to better            what the longer term market            of telco bundles should be            this needs to be grounded            establishing common objectives with telcos

Companies Mentioned In This Report: Apple, AT&T, Celcom Axiata, Cricket Wireless, Deezer, Deutsche Telekom, Digi Malaysia, Globe Telecom, KPN, MetroPCS, Muve Music, Now TV,            Omnifone, Rhapsody, Rogers, Sky, Spark New Zealand, Spinnr, Spotify, Telia, T-Mobile USA, Vodafone, YouTube, Yonder

Methodological note: For the purposes of this report MIDiA interviewed a dozen senior executives from record labels, music services and telcos on condition of anonymity. Their responses are aggregated and anonymised in this report.