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Who’s Subsidizin’ Who? February 9, 2012

Posted by Bill Rosenblatt in Business models, Music, Publishing, Services, Uncategorized, United States.
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Barnes & Noble has just announced a deal offering a US $100 Nook e-reader for free with a $240/year subscription to the New York Times on Nook.  Meanwhile, MuveMusic, the bundled-music service of the small US wireless carrier Cricket Wireless, passed the 500,000 subscriber mark last month.   MuveMusic has vaulted past Rdio and MOG to be probably the third largest paid subscription music service in the United States, behind Rhapsody and (probably) Spotify at over a million each.

MuveMusic isn’t quite a subsidized-music deal a la Nokia Ovi Music Unlimited, but it does offer unlimited music downloads bundled with wireless service at a price point that’s lower than the major carriers.  (The roaming charges you’d incur if you leave Cricket’s rather spotty coverage area could add to the cost.)  Cricket is apparently spending a fortune to market MuveMusic, and it’s paying off.

It looks like the business of bundling content with devices is not dead; on the contrary, it’s just beginning.  The fact that both types of bundling models exist — pay for the device, get the content free; pay for the content, get the device free — means that we can expect much experimentation in the months and years ahead.  Although it’s hard to imagine a record label offering a free device with its music, we could follow a model like Airborne Music and think of things like, say, a deal between HTC and UMG offering everything Lady Gaga puts out for $20/year with a free HTC Android phone and/or (HTC-owned) Beats earbuds.  Or how about free Disney content with a purchase of an Apple TV?

As long as someone is paying for the content, any of these models are good for content creators. device makers, ane consumers alike.  Bring them on!

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