It may be hard to believe given the scale of their new partnership, but Sprint CEO Dan Hesse and Spotify CEO Daniel Ek met for the first time just a month ago in a “spontaneously planned” meeting at San Francisco Airport.
That both companies have been able to turn round from a standing start to launch a significant music bundling offer is evidence of just how much desire and need there is on both sides to make mobile music work.
For Spotify, this could be the deal that pushes them over the edge to convince mainstream America to pay a monthly fee for access to almost any song they can think of whenever they want. “It’s the biggest deal we’ve ever done,” said Ek at a press event in New York on Tuesday (April 29).
With Sprint, the No.3 wireless service, Hesse wants to convince more of his 30 million post-paid monthly subscribers to stay loyal to the No. 3 wireless company even as they pay to use more data.
“There’s an opportunity to get a high percentage of those 30 million customers addicted to music,” says Hesse. “It’s a great differentiator for Sprint.”
Ek says he was especially taken with how seriously Sprint sees music as a core to their customer offer: “It wasn’t half-baked, it was a very impressive plan as opposed to every other discussion we’ve had so far.”
In less than two weeks from that first meeting the plan was in place with Ek getting a final nod from label partners, who tell Billboard they were pleased to see this deal come together.
Hesse says Spotify is an important part of a wider strategy that fits with their “Framily Plan” package which gives subscribers a bigger discount as they sign up more friends. He believes “Framily” subscribers will tell their friends about the Spotify offer to join their plan and get bigger discounts.
“We want the AT&T and Verizon customers to come to us. Spotify is going to be great for us,” he said.
The Spotify/“Framily” offer has an initial free six-month offer with discounts of $4.99 to $7.99 a month for 12 months after the free offer. Spotify, like other digital on-demand services, is usually priced at $9.99 a month.
The two companies did not initially reveal details of their marketing plans but it is widely expected that Spotify will feature in Sprint’s multi-million a year ad campaigns. And Hesse confirmed that Spotify will be marketed to existing subscribers and to win over new customers from its rivals.
The music labels have for some time been encouraging Spotify to reach a deal with one of the major wireless carriers in a bid to help take on-demand streaming music to mainstream America.
Though Spotify is currently the market leader with more than 2 million subscribers in the United States, the concern has been that the Swedish-born company has done too little in marketing and advertising.
The new partnership puts Spotify in more direct competition with Beats Music which has a similar deal with the much larger AT&T Wireless.
The Spotify/Sprint announcement is part of the Sprint’s new Sound Sessions offer for customers and was announced alongside the launch of the HTC One (M8) phone which features Clari-Fi audio technology developed by Harmon/Kardon.
Sprint, which has 54 million subscribers, announced earlier on Tuesday that it reduced its customer losses in the first quarter. This as wireless companies increasingly are looking to content like music to help keep customers loyal.