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EE Expands and Zero-Rates Its Apple Music Promotion but Will Everyone Listen?

by Nitesh Patel | Jul 14, 2017

Since its launch almost one year ago EE’s 6-month free Apple Music promotion has been so successful that EE has decided that starting from 19th July 2017 it will extend the offer to all its post-paid and SIM-only customers with iOS and Android smartphones. Indeed EE has stated to us that “…it has been strong enough for us to repeat the promotion and extend to all our customers, both we and Apple are very happy with it.” The original promotion was targeted as a hook to attract new customers and as an incentive for existing subscribers to upgrade to larger tariffs. EE is now expanding the use of selected and appealing content services as a broader loyalty proposition designed to add value to the tariffs of existing post-paid customers.

The more successful this promotion is at acquiring subscribers for Apple Music the greater the financial rewards for EE, beyond providing a billing platform for Apple Music.

While giving 6-months of free access to Apple Music to all post-paid customers appears a generous offer from EE, would it not have been more prudent to target this offer only at subscribers that have a strong interest in music? Research we have conducted shows that mobile customers split relatively evenly into three groups: those whose loyalty cannot be bought; those who will remain loyal and almost upgrade irrespective of what their operator does; and those in the middle who can be influenced with offers and incentives.

Additionally, access to the Apple Music app will be zero-rated for the duration of the six month promotional period by EE. During a Q&A session with EE’s CEO Marc Allera and his team, EE batted away obvious questions about net-neutrality on the basis that EE would be open to discussing similar partnerships with competing music services, and that it has developed an API to speed up integration of similar content partner services. Subscribers are also required to have some of their data allowance left in their plan or will be unable to stream or download music from Apple Music. Therefore, other streaming music services or other classes of data application will not be at a disadvantage to Apple Music. Allera insisted that EE is approaching zero-rating as a gift to its customers, and to reward them for their loyalty. EE has planned a multi-million pound campaign in the coming months to advertise its proposition. EE is sailing close to the wind and with the EU being stringent on net-neutrality in the past we wait to see if and how legislators will respond. Just as zero-rating became a competitive dimension in the US with T-Mobile’s launch of Binge On in 2015, it has started to become a factor in the UK market recently, with Three’s launch of Go Binge last week following Virgin Mobile’s zero-rating of WhatsApp and Facebook at the end of 2016. Surveys we have conducted indicate that zero-rated data offers for bandwidth hungry media such as video have resonated strongly and have potential to encourage churn and foster customer loyalty, upgrades. However, are limited use-case zero-rated promotional offers going to resonate with high-value subscriber cohorts as much they would by those with smaller bundles?     

The deal will certainly benefit Apple Music, which is trying to displace Spotify as the leading premium music service. Operators like EE are great distribution partners for OTT brands and can drive a significant share of paying customers as highlighted in previous reports. However, from our perspective without a selective and targeted approach we believe EE is giving a lot away with little guarantee of benefits.

Author: Nitesh Patel

Co-Author: Brice Longnos

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