Spotify to carriers: We dont need to be enemies Carriers sometimes bridle at over the top companies that sell services relying on their mobile networks. Spotifys sales pitch is that it can help carriers with their business. AMSTERDAM -- Spotify is one of the most prominent over the top services that tax the mobile data networks of wireless carriers, but the music-streaming service should be seen as an ally, not an enemy, in the view of the companys telco partnership leader. Michael Abbatista argued here that a Spotify partnership actually helps carriers reduce subscriber churn -- the tendency for subscribers to hop from one carrier to another. And particularly with younger customers, it can make the carrier look better. We bring a certain brand uplift, Abbatista said at the Broadband World Forum show here Thursday. Globally, 56 percent of the companys members are under 20, he said. Over-the-top services are a problem for carriers that dont want to be relegated to mere dumb pipe status, a company that merely delivers YouTube videos, WhatsApp text messages, Facebook photos, and Spotify music. Such services consume ever larger amounts of data, so carriers sometimes see them as a problem. Spotify thinks the partnerships can ease relations -- and of course bring in new revenue for itself, too. Its carrier deals take a variety of forms, the most basic being a soft bundle in which carriers simply resell Spotifys service and customers can pay for it through carrier billing. A fancier hard bundle service means Spotify premium subscription rates are part of the monthly mobile fees for higher-end monthly plan. Thats what Spotify likes best, because the paying subscribers tend to keep on paying. Were getting them into the paid funnel and keeping them in the paid funnel, Abbatista said. For hard-bundle deals that offer a year of Spotify service, 80 percent of customers still are paying customers eight months after the deal ends for a particular subscriber. Spotify has such deals with Vodafone in the UK and KPN in the Netherlands, he added. Through deals with the mobile network operators, We get marketing and promotion, usually on a scale wed never be able to afford on our own, he said. And were turning these people into paying customers. Spotify offers 20 million tracks of streaming music in 32 countries. It plans to expand to more than 100 countries by 2014, Abbatista said. So far, its paid $500 million in royalties to the music industry, he added, including some generated by young people who previously only listened to pirated music. For a lot of our users, this is the first time they paid for music, he said.
Posted on: Fri, 25 Oct 2013 05:36:27 +0000