MSearchGroove

By Emma Mohr-McClune

Emma Mohr-McClune is a Principal Analyst at Current Analysis, responsible for coverage of European mobile consumer services. She is an esteemed colleague and frequent contributor to this site, so check back regularly for her take on market trends that matter.

Europe is set to see new bundled content service models appear in 2008-and a new, low-profile MusicStation promotion from Vodafone UK offers an early taster. Not only is this the strongest competitive response to the iPhone we’ve seen to date, but it neatly offsets ‘Nokia Comes With Music’ competition some six months before its expected release.

This Christmas promotion sees Vodafone UK duplicating O2 UK’s iPhone all-in-one bundled service concept, with high-volume voice, text, and mobile Internet components, pegged at a comparable monthly subscription charge for mid-volume users. (See table below.)

However, all three devices featured within this promotion are fully subsidized, and the headline selling point offers ‘free, unlimited music downloads’-a unique proposition in the UK. Vodafone UK has folded the GBP1.99 per week MusicStation subscription charge into a monthly bundle for voice and texts, which also includes a monthly 120 MB quota of mobile Internet data.

This essentially takes the decision of cancelling the MusicStation subscription out of the end user’s hands, thus offsetting the fear associated with losing access to all previously downloaded tracks. To be sure, this promotion is not as aggressively priced as it could be. Vodafone UK’s GBP45 per month bundle offers fewer inclusive minutes and substantially fewer inclusive texts than the corresponding O2 mid-volume iPhone tariff, but end users may swallow this, given the cost benefits of the ‘free phone’ and ‘free music tracks’ in this deal.

However, besides the ‘unlimited free music download’ element, the GBP45 monthly tariff rate is rather high for the target audience, and end users can find better pricing for simpler voice and text bundles, plus a free device, elsewhere. T-Mobile UK, for example, is currently offering a free Nokia N95 with its Flext 35 service (900 minutes or 1,800 texts) bundled together with Web’n'Walk for GBP30 per month. An apples-for-apples comparison will require the more price-sensitive end user to consider whether the GBP15 monthly premium for MusicStation is strong enough to warrant a purchase.

Furthermore, making such a decision will require the end user to consider all the disadvantages in usage and content sharing, which the MusicStation subscription model implies, comparing it against standard, dual-downloadable digital-ownership models for mobile music.

Competitors are advised, though, to look beyond this initial promotion’s pricing level and consider the potential of this model. Vodafone UK could-and probably will-reduce this initial GBP45 monthly fee to suit its own competitive agenda at a later date. Any discount that moves this monthly subscription charge closer to standard benchmarks for voice and text bundles will make Vodafone UK more dangerous in the UK market in 2008.

Anticipating and offsetting a mid-term challenge from Nokia, in the shape of ‘Nokia Comes With Music,’ is clearly a goal here. Next year is set to be a big year for mobile media-and this Vodafone UK promotion, together with ‘Nokia Comes With Music,’ underlines a significant departure from existing business models for mobile music and content.

The ‘flat rate’ is starting to encompass a more comprehensive range of services-from voice to text and mobile Internet. On top of this, ‘free content’ will be bundled into monthly subscriptions and end users are likely to face more choice than ever with innovative pricing and subscription models. One unanswered question here is the role ‘mobile advertising’ will play in subsidizing the inclusive content element of such all-in-one bundled services.

Competitors despairing at the prospect of promotions, such as this Vodafone UK bundled MusicStation promotion and the challenge of future services such as ‘Nokia Comes With Music’, are advised to consider ad-sponsored content within their competitive response decisions.

• Posted in
• Mobile Music, Mobile Content

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