RIM Unveils BlackBerry Social Music Service, But Will Youthful Consumers Bite?
Research In Motion
(RIMM) unveiled its BlackBerry social music service BBM Music on Thursday. With BBM Music -- which launched a beta trial in North America and the United Kingdom on Thursday and will roll out commercially later this year with a $4.99 monthly subscription -- the company is clearly hoping to win over youthful consumers.
The service has the sorts of social bells and whistles that appeal to the uber-connected young audience:
Consumers can add up to 50 songs in their music profile and share them with their friends and family who are also using the BBM Music service.
With each BBM Music subscriber they add to their personal community, that friend or family member's music collection becomes available to them.
Subscribers can learn which songs their friends and family members are listening to on the service and comment on their playlists and choices, as well as know which community members have supplied a song they are currently listening to.
Users can also swap out up to half of their 50 songs from their own music collection in a given month.
The hope is that such features will make a BlackBerry smartphone more attractive than Apple's (AAPL) iPhone or a Google (GOOG) Android-based phone. But will it be enough to alter the struggling handset maker's ongoing market share loss to its rivals?
The Company Can't Afford to Hit a Flat Note
Research in Motion needs its new service to top the charts. "The consumer market is important for RIM. Over the past few years they have seen an erosion in that space because of the iPhone and Android," said Ross Rubin, executive director and a consumer technology analyst at The NPD Group.
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Targeting youthful consumers is a smart move: They not only purchase music but also apps, both of which can provide BlackBerry with additional revenue streams. And Research in Motion needs every penny it can get.
When the company reported its first-quarter results in June, it reported revenues below analyst expectations and noted its second-quarter and full-year results would also fall short of Wall Street's expectations, said Jonathan Goldberg, a Deutsche Bank analyst. In addition, the company said it would cut 2,000 jobs to save money.
But many analysts say BBM Music isn't the catchy tune that it needs to be.
Making It Too Hard to Hear the Music
"I think BBM Music offers an interesting set of features, especially the social elements, and clearly is a differentiated music offering versus RIM's competitors," said Charles Golvin, a principal analyst with Forrester Research. "While having a new or quality music service is not likely to make people chose a BlackBerry over another phone, not having a music service could have eliminated BlackBerry from consideration [by consumers]."
Still, Golvin and others point out that the service comes up short on several fronts:
It's overly complex to use: Programs that are too complicated can impede consumers from adopting them.
It requires too much mooching: Another strike against BBM Music, Golvin said, is that it relies on a user's social network -- and their willingness to pay for the service -- before a user can expand beyond their allotted 50 songs and get the full benefit of the service.
It's unpredictable: "Your [music] library can shift underneath you as your friends update their favorites list," Golvin points out.
It's too limiting: When consumers are shopping for a smartphone, handsets like the iPhone or Android phones connect directly to a large ecosystem of apps and music for the phones.
Goldberg, of Deutsche, says none of the service features particularly stand out other than the integration with the BlackBerry Messenger service itself. "It's too little, too late," said Goldberg, who has a "sell" rating on Research In Motion's stock.
Motley Fool contributor Dawn Kawamoto does not own any shares in the companies covered. The Motley Fool owns shares of Google, Apple, and Research In Motion. Motley Fool newsletter services have recommended buying shares of Apple and Google, as well as creating a bull call spread position in Apple.
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