Vodafone UK to offer unlimited music downloads

Jonathan Arber/Ovum
13 Sep 2007

Yesterday, Vodafone UK announced that from November it is to offer a subscription-based unlimited music download service. For £1.99 per week, Vodafone customers will have access to unlimited downloads from a catalogue of over 1m tracks. The MusicStation service is being offered through an exclusive agreement with UK-based mobile music service provider Omniphone.

It's a good time for Vodafone to announce the next step forward in its music strategy. Nokia's recent music announcements and the iPhone's new ability to download on the move (albeit via WiFi) have raised questions about how operators would respond.

The Vodafone/MusicStation announcement hits many of the right marks:

  • it will be available on 70-80% of handsets and to both prepaid and postpaid customers
  • the service scales depending on the user's handset and network speed, meaning that users on 2.5G get slightly lower-quality downloads in order to keep download times to a minimum, while HSDPA users will get fast downloads at fairly high quality
  • the MusicStation application is focused on ease of use and offers a number of attractive social networking and music recommendation features
  • the one week free trial for all Vodafone UK customers should also help drive uptake.

However, we still have some doubts about whether the service can truly penetrate the mass market. To date, music subscription services on the PC have not met with a great deal of success, and Vodafone will have to work hard in communicating what is a fairly complex value proposition to its customers. The pricing may also be too expensive for some consumers: at nearly £8 per month, this is around 150% of its current non-voice ARPU.

It is also pushing its Mobile Internet service and £7.50 monthly data tariff, which will target many of the same users as MusicStation. At over £15 per month, we can't see many users taking up both services, so there is something of a conflict here.

This is undoubtedly great news for Omniphone and adds considerable weight to the MusicStation proposition. While it initially launched with Telenor in Sweden in June, this is the first Tier 1 operator launch for the service, and endorsement from such a high-profile MNO is vital.

The service is being offered as an exclusive to Vodafone in the UK, and success here could make it a golden ticket for operators worldwide, many of whom are looking for a defence against device manufacturers and off-portal players who seem intent on crashing the mobile music party.

Jonathan Arber is an analyst working within Ovum's [email protected] team

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