As wireless giants battle for dominance in expensive ads and in federal court, the small no-contract service Cricket is quietly humming a tune of its own.
Through its Muve music service, Cricket has seen its business grow by 100,000 new customers in a few months. That growth is marginal for giants like AT&T and Verizon Wireless, who each have more than 90 million users. But for Cricket, with just 5.7 million customers in 35 urban markets, the growth is significant and is making the company rethink its role in the wireless industry.
“We have a unique customer base who says their phone is their central point to the Internet and to whom music is also hugely important,” said Jeff Toig, general manager of Muve. “What has been surprising is just how important music has been to them - that so many are coming because of the music service.”
The service is $5 to $10 more a month on a regular package of voice, texting and data. The final bill for Cricket’s smartphone users can be as much as $65 a month.
We talked earlier this week to Toig about the music strategy, which Cricket eventually hopes to take outside the United States. But competition is heating — the biggest providers are partnering up with music platforms and offering similar packages.
Here’s an edited version of our chat:
Q: How did the idea for Muve come about?
A: Three years ago, we saw competition in our space accelerate, and we began to think about how Cricket could win in the future. We’ve always had a deep understanding of the segment of the market we serve — value customers who are looking for a great deal but who also wants a great product. We looked at what would matter most to them and began to think about creating ga product that would be meaningful to the market.
Q: Why did music come to mind?
A: Well we kind of stumbled on music. It wasn’t like an “Oh, my god, we all want to be rock stars” moment, but we knew that we had huge success with our ringback tones, which we launched in 2007. It was generating more revenue for us than any other carrier — even more than the biggest carriers. Our customer had an interest in mobile music that was way overindexed relative to our size. They were willing to pay $5 a month for ringback tones. So we started scratching our heads, the music industry started scratching their heads, and we began working together on what has now become Muve.
Q: What is it about your customers and music? Your customers appear to be largely Hispanic or African American, younger and described as ”value” cell phone users.
A:Our customers love music, but were facing real pain points. For them, the phone, and not the computer, is the center of their digital lives. But services like iTunes and Rhapsody and Pandora and MOG were first built around the consumption of music on computers. A large segment of our customers don’t have high-speed Internet at home, and even if they could afford it, they would see their phone as a better alternative.
Q: But all the competing services you mentioned have mobile apps.
A: Well, look at Apple’s experience, which is still hard because you have to download music to the computer and then cable it over to your Apple devices. [That’s changed with the recent launch of Apple’s iCloud service]. That’s too many steps for them.
Q: And how do you define a value customer?
A: It’s someone who is middle-income or lower-income, and in this economy there are a lot of people who are just looking for a good value. And credit plays in. That customers may not pass credit check or doesn’t want to get into a two-year phone contract. Our customers may also not have a credit card to hold accounts with iTunes. Our customers are young, working, and in school or places where they have their phones on them at all times and often are listening to music.
Q: Is Muve driving new subscriber growth?
A: Yes, we have signed up 200,000 to the unlimited monthly music download services, and half of those users are new customers. And the users are downloading 400 songs a month on average and listening to two to three hours of music a day.
Q: That’s a lot of strain on your network.
A: Not really. These are not streaming music files; they are downloaded and compressed to take just 10 to 20 seconds a download.
Q: You may have been first, but how do you keep this a differentiating product when Metro PCS is doing the same with Rhapsody and the giants will be offering their own services, too. Even WalMart and Amazon are in the game.
A: Yes, there is more competition, but Verizon is trying to distinguish themselves in a different way. They are working on the perception of having the best network quality. We think of ourselves as the Jet Blue or Southwest Airlines of the wireless industry, whose customers are looking for something different.
Q: What’s the future of Muve? Videos? Foreign markets?
A: Yes and yes. Music videos make sense, and we’ve created a blueprint to include music with wireless service. That could be very successfully scaled to markets — emerging markets particularly — where people also see their device as the center of their digital world and where music is hugely important. We have relationships with the music industry and handset manufacturers to create a unique solution to bring this model global.