Large mobile operators could add millions of euro to their bottom line by partnering with a music-streaming service, according to research between Informa Telecoms & Media and Spotify.
With the rising popularity of smartphones and streaming services, the research said music could make a substantial impact on operator’s market share, ARPU and churn.
It also said that by partnering exclusively with an existing player as opposed to building their own service, operators who move fast can realise these gains quickly while shutting out competitors.
The study estimates that an operator in Western Europe with 20 million customers could generate revenues of €77.7m in 2011 alone from a partnership of this kind.
The findings showed that, if each leading operator in Western Europe did this, they could collectively generate €1.1bn in 2011.
“Our research shows a large Western European operator could generate millions of euro in revenue a year by partnering with a third-party music service – significantly more than they would gain from offering their own service,” said Giles Cottle, senior analyst at Informa Telecoms & Media.
“Add in other benefits, such as network efficiency, brand awareness and increased lifetime customer value, and the potential for such a partnership becomes very clear.”
Director of European Business Development at Spotify, Adrian Blair, said streaming services have proven to be an effective way to differentiate from the competition and win new members.
Blair said they have also been used to upsell high-ARPU devices and reduce churn as seen with European network operator Telia.
“Over half of Spotify/Telia customers said they were more likely to stick with Telia as a result of the Spotify partnership,” said Blair.
Cottle from Informa insists that just offering a popular free service with little thought into how the offer is packaged and marketed won’t yield the right results.
However, he said that if done right, the rewards could be “potentially lucrative.”