How will Virgin Media use their exclusive Spotify deal?

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VIRGIN MEDIA signed a deal making them the UK's exclusive telecoms partner of music streaming service Spotify last month.

The long-awaited partnership between the two will bring the streaming service to Virgin Media's TiVo set top boxes (see their bundles here) as well as Virgin mobiles.

But it'll be interesting to see what that'll mean in practice.

Spotify's service is already available on many devices and it seems unlikely that the company would be willing to give up one of their major selling points - portability - or, for example, make the service exclusively available to those signed up with a particular ISP.

How exclusive?

Spotify currently offer three streaming options:

All three will soon be available through Virgin Media as well as direct from Spotify.

However, all that's likely to mean in practice is a co-branded page or two. Exclusive, but not particularly exciting.

Also likely to be on the horizon are sign up incentives.

Previously Three mobile broadband has offered free trials of Spotify's unlimited plan to new customers signing up online.

But the offer was only a month longer than trials available elsewhere. Not really worth writing home about.

We hope Virgin Media will be able to do a better job along these lines.

Existing customer benefits

However, what we're really hoping for is that, as well as limited sales, Virgin Media will offer Spotify plans at a knock-down price for their customers: a long-term benefit that could save Spotify/Virgin fans hundreds of pounds.

The provider has started to do this in a limited way already.

From today those with Virgin Media's fastest deals can get Spotify Unlimited half price for 12 months.

According to Virgin Media's original announcement both existing and new customers will also be able to access "exclusive features and content... [and be] eligible for special promotions" from Spotify.

Let's hope they extend this beyond their top tier of customers.

The ISP's focus on consolidating their current customers suggests that it's at least a possibility.

"This new campaign is all about our mission to be the customer's first choice," said Jeff Dodds, Virgin Media's executive director of brand and marketing last week as the brand released ads reminding existing customers to stay put or upgrade to a better deal.

"We have lots of competitors trying to turn heads with introductory offers that look great on the surface but just don't deliver real value. We're taking the opportunity to remind our customers... why they're right to choose us, stay with us and recommend us."

So far, the new approach seems to be working.

The provider lost 36,000 cable customers in the last quarter but managed to increase profits by moving its focus on to its fastest - and most expensive - broadband deals.

Streaming dreams

The deal puts to rest Virgin Media's own streaming dreams.

In 2009 the provider announced that it planned to launch an unlimited music download subscription service.

The service fell through, however, after only Universal Music actually signed up.

All the UK ISPs are keen to show that they have a commitment to legitimate music downloading services as the Digital Economy Act rolls into force in the next year.

The act will mean that broadband providers will be under more pressure than ever to lead rights holders to illegal downloaders and promote legal alternatives.

With deals with almost all of the major labels, Spotify is the most successful legal alternative yet.

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