You might not see the latest trend from businesses to make their customers more loyal, but you’ll definitely hear it.
Increasingly, companies are turning to streaming music services on mobile devices to enhance their relationships with consumers. And this isn’t just limited to the big tech firms like Google, Apple, and Amazon. Companies you normally wouldn’t associate with music are getting into the mix, like Starbucks and Honda. Underdog wireless carriers like Cricket are offering their customers a complimentary music service on their smartphone, while T-Mobile is attempting to stand out by not counting the use of streaming music services against its customers’ monthly data caps.
So while most everyone can see that the presence of mobile music is becoming more important to businesses, the bigger question is why?
We’ll be exploring how the rise of mobile audio could help grow your mobile business at MobileBeat 2014 in San Francisco on July 8-9.
Companies have only a handful of opportunities to grab a consumer’s attention. And they pay dearly to do it. An average 30-second commercial spot on prime time broadcast TV can cost between $100,000 and $500,000 depending on the show — and there’s no guarantee your target audience will even be watching it. Plus any small mistake in a campaign can mean that money’s wasted.
As a result, several companies have started spending money on music services for mobile devices. If a consumer is tuned into a block of songs blasting out of the speakers on their iPhone, there’s a fairly good chance they won’t miss the 15-second ad message after the fifth song or the display ad that needs to be dismissed before they’re able to skip past that Jack Johnson track that’s causing everyone in the room to glare at them irritatingly.
Starbucks’ iOS app is a good example of how mobile music is helping companies deliver better messaging. The company offers a free weekly song to customers who sign up for a Starbucks rewards account. So while you may have only wanted to snag the latest song from The Black Keys for free, you now know that Starbucks is offering double rewards points on all in-store purchases this weekend — and that you get free refills all summer when you buy an ugly tumbler mug.
When you own the thing that grabs attention, you control the message.
One of the biggest reasons streaming music services are becoming more attractive to businesses is their stickiness — or the ability to keep your customers sticking around a service powered by your brand.
“Really it’s about keeping people who are already customers shopping within that company’s ecosystem,” said Ty Roberts, chief strategy officer and cofounder of Gracenote, a company that provides a variety of music services to outside companies. “The main thing you have to note is, listening to music is something you do every day. There are things you do once a week, once a month, and only on occasion.”
This year Gracenote started offering companies the ability to launch their own streaming music capability (with smart radio station creation, song recommendations, etc.), which basically forged the way for non-music businesses to dip their toes into the pool.
“Without the problem of licensing, all your need [for a streaming music service] is the technology to generate music channels, a brand consumers can identify, and a concept,” Roberts told VentureBeat. This is something the company is able to do for many of its clients via its Rhythm platform.
Plenty of car makers are also turning to streaming services as a way to continue their relationships with customers, although I’ll admit that doesn’t make a ton of sense to me. If consumers only purchase a car once every 7 to 8 years, why spend so much energy maintaining a music service for people you’ve already sold to?
“It’s more like automakers need a music service to help sell the car in the first place,” Roberts said, adding that the convenience of having a premium music service available is how Sirius/XM Radio was first able to take hold, especially if a new car’s dashboard was Sirius-enabled and free for a set period of time. “But once [car makers] have your attention, there are all sorts of valuable things you can do with it.”
Another reason companies are devoting resources to mobile audio is attention span.
Businesses usually only have a handful of opportunities to grab a consumer’s attention, especially after they’ve made the initial sale. But there is only so much a company can spend chasing consumer attention, which is why many have revised their strategy towards mobile devices. Smartphones, for instance, are what many people use to wake up in the morning and the last thing they check before falling asleep at night.
So providing a free or complimentary music service to consumers means they’ll be focused on what they’re hearing from a device that never leaves their immediate view. But perhaps more valuable is what a company’s consumers are not focused on.
If you’re listening to Amazon’s Prime Music service, for example, you aren’t switching on the old school AM/FM radio while lounging at the pool. The point is, you can predict what people aren’t doing if they are listening to a music service (or music promotion) provided by a company.
But even paid music services provide a benefit to companies, which is evident when assessing Apple’s recent purchase of Beats Audio and its Beats Music service. Access to an on-demand library of music might decrease digital download sales on iTunes, but it could prevent Apple customers from abandoning iTunes and Apple hardware for a competitor.
And before you point out that Apple might not necessarily represent the trend of business seeing tons of value in mobile music, its $3 billion acquisition of Beats still does. Right now Apple is being forced to keep up with the plethora of mobile music services available to consumers — each with its own set of bells and whistles.
Five years ago, if a company like Honda wanted to launch its own free music service, it would have been a pretty bad move simply because it would cost too much. Honda, and other non-digital companies wanting to dabble in music, would have needed to buy or rent servers; hire a team of developers to ensure the service worked properly; pay for costly music licensing fees; and more. On top of that, most people hadn’t shifted to primarily using mobile devices over desktops. And even those who were already obsessively using their smartphones weren’t able to take advantage of most audio services because wireless networks were too slow.
Today, running a music service isn’t cost prohibitive if you aren’t focused on the business of music. Licensing fees boil down to the three major record companies and a handful of organizations like Merlin Digital that handle music royalties for indie labels. If that’s too strenuous, there are companies offering white-label streaming music services across many devices, including mobile for other companies to adopt. And wireless carriers have upgraded their networks to LTE for faster, more reliable Internet.
Now, larger companies can reasonably include the cost of providing mobile music services in their marketing budgets. And with the shift to mobile, the majority of consumers have access to a smartphone with a decent wireless connection.
Simply put, with fewer barriers to entry, more companies are taking advantage of mobile music as a matter of survival.
One final note
Everyone already knows combining digital music with mobile technology is a killer combination on par with peanut butter and jelly. It’s a topic we’ve discussed at VentureBeat’s MobileBeat event over the last few years.
But it’s only recently that companies across many industries have realized how to make mobile music work to their advantage.