Mobile music has historically been a money pit for carriers. Delivering tunes over the network is a costly endeavor, and consumers are unwilling to pay a premium for accessing music on the go. So high-priced services have languished while users have turned to online streaming offerings like Pandora for their mobile music fix. But Leap Wireless’ prepaid carrier Cricket has a hit on its hands with Muve, which recently notched 200,000 users. Other carriers should be taking notes.
Muve’s fast-growing audience makes Cricket’s offering the second-largest subscription music service in the market, according to the Associated Press, behind Rhapsody. Rather than a stand-alone service, though, Muve is included in Leap’s $55-per-month all-you-can-eat plan for feature phone users, which also includes voice, data and messaging. Cricket recently rolled out a similar plan for Android phones for $65 per month.
The uptake has been dramatic. Muve’s audience has doubled in the past two months, and the average user downloads more than 400 songs per month and listens to music for two to three hours a day, according to Cricket. That success could be duplicated by other carriers if they focus on a few key factors.
Bundling music with voice, data and messaging
Operators have typically tried to mimic Apple’s iTunes by offering songs on an à la carte basis, but they can’t match Apple’s pricing model. Muve is not only packaged with voice, data and messaging but also includes ringtones and ringback tones. (Cricket claims to be second only to Verizon Wireless in ringback tone sales.) The French carrier Orange has taken a similar tack with its Deezer service, which earlier this year passed the half-million-user milestone. The strategy enables carriers to position their offerings as all-inclusive, music-centric mobile services rather than an iTunes or Rhapsody wannabe. And those services will become crucial for carriers looking to compete with Pandora, Rhapsody and others.
Minimizing traffic on the network
Cricket doesn’t cap its mobile data usage, so Muve users can enjoy as much music as they like for the flat rate. That won’t fly at AT&T or Verizon Wireless, though, where overages incur hefty charges. Downloading 400 songs a month eats up more than 1.5 GB, according to AT&T’s data usage calculator, which is three-fourths of that carrier’s biggest smartphone data plan. So postpaid carriers looking to tap the music market will have to find ways to deliver the goods while minimizing traffic on the network. Wi-Fi is an obvious solution, but carriers could also delay downloads and deliver them overnight, when traffic is much lighter, just as GoldSpot Media does with video ads.
Offering protected, subscription-based music
Muve songs are permanently tethered to the handset. Users can’t share them, can’t side-load them to a computer or other device, and the tunes are inaccessible when the subscription lapses. That strategy is not much of a hurdle for Cricket’s base of young music lovers who are drawn to prepaid services and who aren’t married to the idea of owning songs forever. More importantly, wrapping the tunes in DRM (digital rights management software) enables Leap Wireless to pay royalties based on an undisclosed percentage of the subscription fee rather than on a per-song basis. And that can make a huge difference in the music business, where per-song margins are razor thin.
Muve is the first U.S. service that makes unlimited music the centerpiece of a comprehensive mobile service, though fellow prepaid provider MetroPCS recently teamed with Rhapsody on a similar initiative. Those are still niche services that are targeted at younger music lovers, so they’re not much of a threat to tier-one operators. But Cricket has demonstrated that there’s money to be made in mobile music for carriers who can develop an innovative, attractive service. Operators like Sprint and T-Mobile USA should be paying attention.