Rhapsody, the 12-year-old music streaming service, appears to have had a directive for the last two years – expand their music subscription service to other countries, AND use telecoms (telecommunications companies) to gain subscribers. According to Billboard, their strategy has been successful.
Rhapsody (using Napster as its name in Europe) was available in three countries 18 months ago. They are now in 32 countries. Much of their growth came after offering music to one of the world’s largest telecoms, Telefonica. Of their 1.7 million global subscribers, 80% access music through their mobile devices and 60% use mobile exclusively.
Beats Music launched with AT&T as a strong telecom partner. Spotify partners with telecoms outside of the U.S., but not in the U.S. just yet. And Rhapsody has experienced substantial growth relatively recently when partnering with telecoms.
I wonder what the engagement of the subscribers enrolled through a telecom is – a stat I have not been able to uncover. How much do music subscribers who enrolled through telecoms use the music service? Once a day? Once a week? Once a month? It seems if the telecom subscribers are actively using the service, it bodes well for the music subscription services and the music business in general. But if engagement is low, ultimately subscribers may uncheck that ‘music bundled service’ box from their contract. Essentially it is about using the “network effect” to expose people the music service.
Facebook integrated a few music services (including Spotify, Rdio and MOG) a few years ago. Although big news at the time, the initial ‘bump‘ of users because of the “network effect” appears to have cooled within Facebook. Time will tell if using the telecoms has a more sustaining effect.
The definitive good news for streaming is that SoundScan data shows streaming music rose 35% this first quarter, while the unfortunate news is that download sales dropped by 13%, continuing its decline.