MetroPCS deal gives Rhapsody access to credit-challenged consumers
MetroPCS' (NASDAQ:PCS) bundling of Rhapsody's unlimited, ad-free music service, called Music for All, is not only an opportunity for the Tier 2 operator to give its customers access to the popular music service, but it also provides Rhapsody with the chance to tap an entirely new market --the credit challenged.
In an interview with FierceMobileContent, MetroPCS' Staff Vice President of Product Management Gavin Throckmorton said the company's research indicated that many of its customers want streaming and downloadable music services on their mobile devices. Plus, a significant percentage of MetroPCS' customer base don't have credit cards or debit cards but can now pay for the service in advance with cash. "You no longer have to have credit or debit capability to sign up for Rhapsody," he said.
That untapped customer base is appealing to Rhapsody. John Irwin, president of Rhapsody, said that the MetroPCS deal brings mobile music to a new demographic that previously did not have access to the service. Plus, he said that being part of MetroPCS' bundled offering is appealing to consumers because they are getting a number of incremental services beyond just the music service such as digital voicemail. "The incremental $10 per month provides a basket of goods and an incredible value," Irwin said.
Rhapsody has been offering its streaming music service through Verizon Wireless (NYSE:VZ) for $10 per month. Verizon provides carrier billing for the service and the app is preloaded on Verizon devices. However, Irwin sees the MetroPCS model as the next step in the company's mobile evolution. "We want to make it convenient for customers to get our service--one way is incremental billing. The other way is bundled."
Irwin wouldn't provide specifics on the financial arrangements with MetroPCS or any other wireless operator, but he did admit that the bundled model does take a bite out of the company's margins. However, he added that the record labels really like this model because it brings in new customers to the service.
Although Rhapsody does not yet have a deal with AT&T, it is working with the operator and expects to have an arrangement with AT&T (NYSE:T) that is similar to Verizon.
MetroPCS' rival prepaid carrier Leap Wireless' (NASDAQ:LEAP) Cricket Communications also has an all-you-can-eat music service, called Muve. Cricket offers the service as part of its $55 flat-rate monthly service package, which includes unlimited nationwide calling as well as unlimited messaging, mobile web access, data backup and video.
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