Developer: Cricket Wireless
Muve subscribers: 1.7 million
Cricket subscribers: 4.6 million
Monthly fee: Muve is free with mobile plan
Average revenue per user (Cricket): $44.89
ARPU pre-Muve: $38.14
There’s no better example of the marriage of music and mobile devices than Muve Music, the on-demand subscription service developed by prepaid mobile carrier Cricket Wireless. The innovative service bundles all-you-can-eat music — tethered downloads only, no streaming — with unlimited talk, text and data plans.
Although innovative and successful in many regards, the data shows that Muve has had mixed results in fulfilling its goals to Cricket.
THE GOOD: Muve’s strong start shows what can happen when mobile and music companies work together to attract customers. The service had more than 1.7 million customers at the end of June, giving it the largest share of the U.S. subscription market. Of Cricket’s 4.6 million mobile subscribers, 37% were Muve customers compared with 10% a year earlier.
But while Muve has been an undeniable bright spot in digital music, the numbers question how much value a music service can provide to a mobile carrier. Muve hasn’t been able to stop an exodus of Cricket subscribers, and barely half of all subscribers actually use the service.
Cricket created Muve to help drive new subscriptions as well as average revenue per user (ARPU). With adoption of Android devices on the rise, Cricket hoped Muve would help entice customers to upgrade from lower-priced feature phones to higher-priced smartphone plans.
One positive metric is ARPU. Muve succeeded in helping raise ARPU-although its exact share of the credit is unknown-from $38.14 per month in the quarter before launch to $44.89 per month in the most recent quarter.
THE BAD: Muve hasn’t succeeded in helping Cricket grow its subscriber base. During the 10 quarters that Muve has been available, Cricket has lost more subscribers than it has gained.
In the first five quarters Muve was on the market, Cricket had a net gain of 775,000 mobile subscribers. But it had a net loss of 790,000 subscribers in the successive five quarters. The 15,000 subscribers lost during the last 10 quarters casts a shadow over Muve’s success story.
Cricket says Muve is fulfilling its intended purpose. A company representative says Muve users “tend to show a slower deactivation rate” and that active users are “stickier customers.” Losing fewer subscribers means less expense in replacing them and less lost revenue.
“The Cricket Wireless business has a churn rate of 3.6% and reflects the positive impact of Muve,” the rep says.
THE BOTTOM LINE: BTIG analyst Walter Piecyk, who covers the mobile industry, believes Cricket would have fewer subscribers today if not for Muve. Although the carrier lost subscribers, he says the service helped slow the pace of decline. “It was an incremental positive for [Cricket parent] Leap [Wireless] but it wasn’t a game-changer.”
One particular data point sends a mixed message: 55% of all Muve subscribers used the service in May, according to a representative. That figure is subject to interpretation. It could mean 55% of Muve subscribers are less likely to leave the service for a competitor. A more negative interpretation is that Muve isn’t used by nearly half the people who have access to the service.
The nature of the service could offer an explanation. The Muve fee is hidden because subscribers get the service in a bundle. Perhaps usage would be higher if people knew they were paying for it.
In any case, Muve’s 55% usage rate may reveal something about U.S. mobile subscribers that, if true, would be bad news for the music industry: No matter how easy you make it, some people just won’t care about an on-demand music subscription service.