Paris-based music streaming service Deezer has acquired Muve Music, the mobile-focused music service from Leap Wireless. Leap is a virtual mobile operator better known for its Cricket service, which was itself acquired by AT&T early last year. Details of the acquisition weren’t disclosed, but Deezer North America CEO Tyler Goldman told me during an interview at CES in Las Vegas this week that the acquisition was “material” for his company.
Muve Music has been a bit of an enigma for the industry; the music service was a huge success amongst Cricket users, and reached more than two million paying subscribers by the end of 2013. This made Muve one of the most popular subscription music services in the U.S., second only to Spotify. But part of Muve’s success was due to its close tie-in with Cricket, which at one point bundled the music service with all of its Android data plans.
Muve was also very much unlike Spotify and any of its better-known competitors in that it focused solely on music downloads as opposed to streaming, in part due to the lower data speeds for its customers. And Cricket operates as a prepaid business, which led some in the industry to wonder how much those Muve subscribers were really worth. I’ve talked to some industry insiders over the past few months who told me that AT&T asked for too much per subscriber, which may be one of the reason why the sale took so long: The operator had reportedly been looking for a buyer for Muve since at least May of last year.
However, Goldman argued during our conversation that the industry has been ignoring the typical Cricket customer, who tends to be lower-income and is more likely to be hispanic. He argued that catering to this audience is consistent with Deezer’s approach to online music, which is about segmenting the market. The company launched a subscription tier for HD audio aficionados last year, and has been looking to target other audiences with more fine-tuned tiers as well. “Almost every segment is underserved today,” he told me, adding that other services have been trying to sell the same product to very different groups of consumers. “That silver bullet strategy doesn’t work,” he said.
Deezer will offer Muve users a free trial, and afterwards only charge $6 per month, which is significantly cheaper than the typical $10 fee that competing music services are charging. It’s also a lot cheaper than Deezer’s high-definition audio service, which charges consumers up to $20 per month. Goldman said that the company plans to add tiers for additional segments over time, but also launch a bundle of multiple service components later this year.