Spotify strikes its 25th telco deal, with Vodafone Ireland


spotify-logoStreaming music services compare themselves to rivals using various stats: active users, paying subscribers, size of catalogue, payouts to rightsholders… and also how many partnerships they have with ISPs and mobile operators.

Expect to hear much more talk about telco deals in the coming months, as streaming services focus on such partnerships as a way to attract new users and break into new markets with a bang.

Deezer started a new round of comparisons last week with its announcement that it had 25 telco deals around the world, having added 11 in the last year, with those partnerships having boosted its number of paying subscribers over the 5m mark.

Now it’s rival Spotify’s turn. Today, it’s announcing its 25th telco deal, with Vodafone Ireland. It kicks into gear this Friday for both contract and pay-as-you-go customers on the operator, with plans for a €1.5m marketing campaign to support it.

Contract customers on the Vodafone Red tariffs, which cost €40, €60 and €80 a month respectively depending on how much data people intend to use (1GB, 3GB or 7GB) will get Spotify Premium included. Meanwhile, pay-as-you-go customers can pay €9.99 a month to get Spotify and 250MB of data thrown in.

“It’s the first prepay-heavy deal in Europe,” Spotify’s head of global strategic partnerships Chris Bevington told Music Ally, ahead of the announcement. “Vodafone Ireland’s consumer base is mostly on the prepaid side, so we’ve had to re-engineer our approach, and be quite creative in making the prepay bundle. These are the people who traditionally spend less on music, so the labels are very pleased with it.”

There are previous examples of services trying to target these kinds of young, pay-as-you-go users: US operator Cricket Wireless’ Muve Music with its 2m subscribers being the obvious one, but also Orange UK’s experimental Monkey service a few years ago.

Bevington’s colleague Michael Abbattista, global head of telco partnerships for Spotify, said that the company is continuing to pursue telco deals around the world, like its rivals.

“Some of our partners have renewed the deals several times: we’re in the fourth year of our partnership with Telia in Sweden for example,” he said. “We’ve seen partners that started with one offering, maybe just aimed at under-29s, who’ve then opened it up to other customer segments. That’s very encouraging: if it wasn’t working, they’d be the first ones to tell us they don’t want to do it any more, but we’ve been seeing the opposite.”

There aren’t any public figures to back this up, in terms of how many Spotify subscribers come through telco deals. Abbattista did say that the majority of people who sign up for a Spotify bundle via a telco use it every month, and “a lot of those people” start paying for the service if and when the trial paid for by their telco runs out.

The deals on offer are evolving, too. “Two years ago, it was all about either a bundling deal or no deal. But we’ve gotten a lot more creative about doing different sorts of scenarios: bundling deals, extended trial deals, figuring out a way to work with prepay customers,” he said.

There’s an interesting debate emerging about how streaming services count their paying subscribers when they come in via telco deals: for example, the question of whether they’re counted as ‘active’ users even if they never actually activate the streaming service, or if they happen to be in a trial period when the latest active users total is announced.

One argument might be that it doesn’t matter: the streaming service (and thus its rightsholder licensors) is getting paid. But Spotify is clearly on a bit of a mission to establish a reputation for transparency here: “We only count people as active when they get Spotify in a tariff if they’ve activated the service,” said Abbattista.

“If you talk to the labels, they’ll tell you we have the best activation level – people actually signing up to the service – the best engagement level, which is people actively using it, and then the best conversion level to paying subscribers.”

2014 is likely to see more of these kinds of arguments between Spotify and Deezer, but also fiercer competition for telco deals from other companies, including Rhapsody/Napster (which recently struck a partnership with the Telefonica Group) and Beats, which has yet to launch but has already been tipped to do it in the US with one of the biggest American telcos, AT&T.

What about the US? The big carriers there haven’t signed exclusive deals with any of the streaming services yet. When might that happen? “Hopefully 2014 will be the year when the US carriers really step up with subscription services, and start to do these deals,” said Abbattista. “The conversation has been going on about bundling deals for 10 years now probably, but you will see movement in 2014.”

Written by: Stuart Dredge