TeliaSonera’s digital partnership with OTT streaming music disruptor Spotify has worked well when other operator music tie-ups have languished. We investigate how the partnership has helped both companies to target new market segments and develop innovative products, with Spotify benefitting from TeliaSonera’s marketing channels and direct investment, and TeliaSonera leveraging both Spotify’s brand association with youth-oriented digital innovation, and the serious stickiness of the Spotify service.
An agile approach to building and managing complex partnerships is one of the key elements of becoming a Telco 2.0 organisation. As discussed in our previous report on Digital Partnering Strategies, we see two new trends in telco approaches to digital services partnerships:
- The focus on partnering as a core competency of the telco organisation;, and
- The increasing complexity of telco partnership ecosystems, as digital services, enabling technologies, and service delivery value chains continue to evolve.
The increasing complexity of digital services partnerships, and the related trend for larger partnership ecosystems with many partners participating from different levels of the value chain, require telcos to take a different and more flexible approach. To be effective, this approach needs to take into account, and support, the particular characteristics of digital businesses:
- Need for scale: A potential digital services partner will usually want to build global scale and so is likely to have several telco partners.
- Need for speed: Digital services partners will in many cases move at very different speeds from telcos in terms of decision-making and processes,
- Need for flexibility: particularly for channels and business models. Digital services partners (especially those with consumer propositions) are likely to use a variety of distribution channels, some of which will bypass, or compete with, the telco partner (particularly for OTT B2C content services such as Spotify). For both B2B and B2C partnerships, business models and revenue sharing arrangements are likely to be fluid and to involve multiple parties.
Based on our observations from TeliaSonera’s long-term relationship with Spotify, and from our earlier analysis of AT&T’s successful Drive connected car ecosystem, we have identified a set of key success factors, and major barriers, for effective digital services partnerships between operators and third parties.
In this report, we evaluate the TeliaSonera-Spotify partnership against this framework, as well as looking at the drivers for the partnership, the quality of execution, and the evidence of its success.
- Executive Summary
- TeliaSonera’s partnership with Spotify: Overview
- A B2C single-focus partnership
- TeliaSonera’s rationale for the deal: Part of being a ‘New Generation Telco’
- Evidence of the partnership’s success
- Drivers and key success factors for the TeliaSonera-Spotify partnership
- Drivers and objectives for TeliaSonera
- Benefits of the TeliaSonera partnership for Spotify
- Key success factors for TeliaSonera’s partnership with Spotify
- External/Market-Driven (demand-side) factors
- Internal / organisation (supply-side) factors
- Organisation structure and the approach to managing joint activities have been important
- Challenges to successful digital services partnering – lessons from other music partnerships
- Barriers to successful partnering: framework
- Spotify vs Deezer: the tale of tape
- Figure 1: Characteristics of single-focus digital services partnership models
- Figure 2: Spotify Key Metrics, 2014-2016
- Figure 3: TeliaSonera-Spotify 7-year partnership timeline
- Figure 4: Spotify Global Monthly Active Users and Premium (Paid) Subscribers, 2009-2015
- Figure 5: Telia Denmark Mobile and Multiplay Packages With Spotify Premium Options, February 2016
- Figure 6: Spotify Business (Soundtrack Your Brand) promotion, Feb. 2016
- Figure 7: Drivers and key objectives for TeliaSonera-Spotify Partnership
- Figure 8: Key success factors and barriers for TeliaSonera-Spotify Partnership