Muve Music Has 2 Million Paying Subscribers, So Why Does AT&T Want to Offload Them?

AT&T is looking to sell Muve Music, a subscription music service with more than 2 million paying subscribers, and one of the most successful subscription music

AT&T is looking to sell Muve Music, a subscription music service with more than 2 million paying subscribers, and one of the most successful subscription music services, according to GigaOm and The New York Times.So what gives?It turns out that Muve Music had a savvy acquisition strategy but not a good partnership or retention plan. The service was started by Leap, which launched Cricket, which ties Muve Music in with its data plan for cell phone subscribers for an additional $10 a month. As we’ve seen before, tying in subscription content services with cell phone carriers can be a smart way to quickly acquire an audience.But the problem with partnering the service with Cricket is that Cricket targets low-income audiences (the majority of users make less than $30,000 a year), and therefore, many Cricket subscribers pay for their phone service with a prepaid card. While targeting low-income audiences is initially smart since they are ignored by other music subscription services, the acquisition tactic will backfire when renewals come around because prepaid cards are more difficult to renew, as Paul Larsen explained to our audience in 2010.So even though Muve Music has 2 million subscribers, retention marketing for this group will take more effort. Furthermore, because the service was tied to Cricket Wireless, Muve subscribers aren’t really loyal subscribers, and many may not stick when AT&T initiates its plans to restructure Cricket in coming months.AT&T also has a deal with Beats Music, a subscription service that’s also being courted by Apple (who just made a bid of $3.2 billion).While the demise of Muve Music might be disheartening, the high sales and acquisitions of music streaming service may point to more optimistic news for the subscription music industry. As Aram Sinnreich, a media professor at Rutgers University, recently said, “The age of digital downloads is basically over.” Today’s audiences, especially younger ones, don’t want to own media formats that become outdated in 10 years; instead, they prefer subscription services that allow for multi-device access and are automatically updated to be compatible with newer devices as they’re invented.

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