ROK Mobile is a new company which intends to join streaming music to mobile phone service more inseparably than ever before.
We’ve seen an acceleration of music/telecom bundling in the last year. Beats Music launched with an AT&T integration, offering long trials and lower subscription prices to AT&T customers. Spotify joined up with Sprint, and Spotify founder Daniel Ek expressed hope that his music service would reach more middle-Americans as a result. Paris-based Deezer plans to expand to the U.S., but only with a telecom launch partner for leverage. Rhapsody partnered with international wireless giant Telefonica.
Music/telecom bundling has win-win advantages. The phone company instantly gains a recognized music service that it can offer to its customers, which helps retain them. The music service gains exposure to new potential audiences, and benefits from the existing payment relationship — adding a music subscription doesn’t add a new bill in the home.
The value equation of streaming music in a wireless phone plan, in an era when music listening is increasingly a mobile consumer behavior, is not lost on the founders of ROK Mobile, which will launch in the U.S. on July 4. ROK is the first wireless phone plan that incorporates streaming music as a foundation feature. Furthermore, ROK is not getting into the streaming game through bundling or acquiring the music platform, but by building it from the bottom up.
ROK has licensed a 20-million-track music catalog in support of its mission statement: “ROK Mobile is an innovative telecommunications and music streaming company that is striving to bring our customers the best cutting edge technology and music personalization to improve the way our customers live, work and play.” (GigaOM has a profile of ROK’s founders here.)
ROK’s plan is an endorsement of mashing together music and mobile phone service, and a startling advancement of business strategy. Rather than bolting a music service into an existing wireless customer base, ROK will attempt to build an audience on the lifestyle proposition of mobile streaming music. Subscribing to ROK’s music app will be an option only for those who also sign up for ROK cellphone service.
In that model, ROK will keep all the music revenue (not the case with a partnership), and fund the cost of music licensing with phone service revenue. Pandora, Spotify, and many other major streaming music brands remain unprofitable, in part because of music licensing cost. (See Bloom.FM CEO Oleg Fomenko’s remarks to RAIN after Bloom’s demise.)
The challenge for ROK might be awareness marketing, and shifting the field of competition from big-media music streaming platforms to big telecom companies.
This model of tying a service to only one mobile provider, was tried once before, by Cricket Wireless, owned by AT&T through a placeholder company. That was Muve Music, now that was shut down a couple of weeks ago, and the supposed successor to it, Beats Music, is also gone from the AT&T fold. As was elsewhere reported on this same blog, Beats was purchased by Apple.
Thanks for the comment, Jim, and yes, Cricket/Muve was tied exclusively to AT&T. (AT&T is now reportedly attempting to find a buyer for Muve.) The difference with ROK is building a music service and phone service together, as a completely integrated value proposition.