Spotify's new partnership with Virgin Media in the U.K. shines a light on the path the access model will take into homes around the world. People already pay for access to the Internet, cable television and telephone services. So why not music?
As was expected last week, the two companies announced their partnership, according to various reports Wednesday. In the coming months, Virgin Media customers will have the option of adding Spotify to their TV, Internet and mobile plans. One aspect of the deal is exclusive: Virgin Media will be the only U.K. company to integrate Spotify into its TV offering.
The companies did not give specific prices but said the costs of the plans would be less than normal. The PC-only level of service costs £4.99 (about $8) per month while adding mobile access raises the monthly fee to £9.99 ($16). The free, ad-supported version is not part of the deal.
There have been many reasons why music has been left out of the TV, broadband and mobile plans until recently. Available music services have not drawn much mainstream interest and haven't made attractive potential partners. Streaming has taken a backseat to downloading and only recently have streaming services delivered the type of user experience a telecom would want to offer its customers. And there have been few viable music services with which to partner. A telecom needs not just an excellent product, but must be assured the music partner will be a growing concern in a couple of years.
Now that the products are improving, partnerships will be necessary for subscription services to break into the mainstream. One reason is marketing. Without the muscle of a telecom, reaching and converting tens of millions of consumers into paying customers is going to be cost-prohibitive. More importantly, partnerships will bring down the cost to the consumer. Rights holders have effectively established the prices at which music services can operate - and the current prices are too high. At $10 a month, subscription models aren't going to find too many takers. But if the cost is defrayed, or if the cost is essentially hidden inside a bundle of services, subscription services will have far greater adoption.
Spotify is expected to launch in the U.S. this month, http://www.billboard.biz/bbbiz/industry/digital-and-mobile/business-matters-spotify-reportedly-launching-1005251182.story but don't expect a partnership with a U.S. mobile or ISP company to be announced when the service finally arrives. But as subscription services improve and draw listeners, expect to see some music services make major partnerships that will give them a greater audience and reshape how Americans think about accessing music.