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Summary

AT&T has agreed to sell Muve Music to French music-streaming service Deezer. The operator acquired Muve last year as part of its purchase of Muve’s owner, Cricket Wireless. It will now discontinue the Muve service on Feb. 7, and prepaid customers will be able to buy subscriptions to Deezer from Jan. 31, for $6 a month.

Another nail in the coffin of music-downloading services

Muve’s future has been in doubt since last year, when AT&T acquired Cricket and launched its partnership with streaming service Beats Music. At the same time, music-downloading services have been declining in popularity compared with streaming services such as Spotify and Pandora, which can offer a wider selection of music, along with curated playlists based on moods and activities, without taking up excessive space on a smartphone or tablet. This was also a reason for Apple’s purchase of Beats Music’s parent company, Beats Electronics, in May 2014, as the OEM searched for a way to revitalize its iTunes offering.

Operators have also been aiming to encourage their customers shift to streaming, since it uses cellular data more intensively and consistently. European operators have been quick to sign deals with services such as Spotify as a way to improve their customer offering, but AT&T is the only major US operator that has pursued music offerings so aggressively. Of the remaining large US players, Sprint now offers its customers free access to Spotify Premium for periods of three and six months, and T-Mobile has struck deals with all of the major music-streaming services to offer its customers zero-rated access to music.

The AT&T deal also presents Deezer with the opportunity to challenge rival Spotify in a new market, the US. The service has until now been available only to buyers of Sonos and Bose audio equipment, but pairing with AT&T will give it additional reach in the US market. However, the terms of its deal with AT&T are risky, since it could prove difficult for Deezer to expand beyond its association with lower-value prepaid customers and truly challenge the players that are more established in the US market.

Another important point that suggests this move might not prove successful is the shift among US streaming customers toward curated services, such as Beats Music and Songza, rather than pure on-demand services such as Spotify. Although it is difficult to determine the number of subscribers each service has, it is possible to gauge their popularity from the fact that the latest high-profile deals were Apple’s purchase of Beats Music and Google’s purchase of Songza, specifically for the curated playlists and recommendation engine, respectively.

To expand beyond its niche with AT&T, Deezer will have to expand its offering to differentiate itself from its entrenched rivals.

Appendix

Further reading

“Deezer rollout in the US gathers pace with Muve Music acquisition,” ME0001-000115 (January 2015)

“AT&T’s Beats Music deal sees another front opening in US operators’ fight for customers,” ME0002-000515 (January 2014)

“Apple and AT&T both betting on Beats for music streaming,” ME0001-000003, (May 2014)

“Digital Music: Google buys Songza”, TE0001-000867, July 2014

Author

Francesco Radicati, Senior Analyst, Digital Services

francesco.radicati@ovum.com

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