Saturday, January 22, 2011

Midem 2011: Building a music platform with money that could be spent on tax

So, MIDEMNET is underway, the pre-MIDEM digital wing of the music industry's excuse to spend part of January in France, and amongst the interesting factlets sneaking out is that Vodafone's music service looks like it's doing a bit better than Nokia's soon-to-be-hit-with-a-car-jack OviMusic. MusicAlly reports:

More than 100,000 people in the UK have signed up to Vodafone’s paid music subscription service, according to Lee Epting, the operator’s content services director.
It's amazing what you can do if you don't pay your £6billion tax bill and get it knocked down to a smidge over £1bn, isn't it?

(I know Vodafone claim the £6bn figure is wrong, but until such time as they decide to tell us exactly how much they weaseled out of, it's the best figure we have to work with.)

It's an interesting headline figure, and sounds like a fairly strong start to the service - although it gives no indication of churn rate or how many of those sign ups include people taking advantage of the 'first month free' offer with the intention of jumping ship as soon as they can. Nor do we know how much of money that could otherwise have been spent by the state building hospitals has been lavished on attracting those 100,000 subscribers.

Vodafone have been sensible in building a store that you don't need to be a Vodafone customer to use, and selling files that are unlocked and can be shifted around from phone to computer to iPod.

They're also been cunning in setting their usual store prices unrealistically high, which makes the subscription service seem like more of a bargain. This isn't, by the way, an all-you-can-eat model like Nokia's, but something more akin to eMusic's "you give us a fixed sum a month, and you can download a fixed number of tracks a month". So, it seems, you've got a better chance of locking people into a service where they get something tangible - if you can call a digital music file tangible - than something where you have wide access but nothing is yours.

Let's not forget that this is a very limited success, though: Vodafone has over 18 million customers in the UK [Source: Vodafone half year results to 30/09/10]. Only managing to get 100,000 of those to sign up isn't that amazing a conversion rate.