Analysis

Telefonica strikes global distribution deal with Napster


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napsterBig news for Rhapsody and its international subsidiary Napster yesterday, as it struck a global deal with telco Telefonica, including the latter company taking an equity stake in Rhapsody.

Telefonica is hoping its local mobile operators will bundle Napster into their tariffs or promote it as a ‘bolt-on’ for customers, and it’s also transferring customers of its Latin American Sonora subscription music service to Napster when the latter launches in the region on 1 November.

There are some caveats to the deal, though. It’s been done at the group level with Telefonica, so operators in individual countries will be able to opt for other streaming music partners if they want, or stick with those they’re already working with (Spotify for Movistar in Spain, for example).

In the past, central deals with preferred content partners by telco groups were often the spur for local operators to flee into the arms of anyone but that partner to show their independence, so we’ll have to see if such internal politics persist in 2013.

Even so, it’s a bold step forward for Rhapsody, which is aggressively pursuing expansion beyond the US, where it has been stalled on 1m subscribers for some time now. The company launched Napster in 14 new European countries in June, then laid off 15% of its staff in September in a reorganisation geared towards boosting its growth in Europe and emerging markets.

Latin America would be the latter: the upcoming launch will be the first time Napster has been available in that region, with Telefonica one of the strongest partners it could have chosen.

The impact of the deal will depend on the details though. Bundling Napster into tariffs would seem to have more potential than simply offering it as a bolt-on, and the efforts of individual operators to promote whatever transpires will be the key to its success.

Meanwhile, Rhapsody’s European boss Thorsten Schliesche sees the deal as a sign that bigger fish like Spotify and Deezer can still be disrupted. “I don’t think the market is done yet,” he said yesterday.

Stuart Dredge

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