Tesla appears to be shifting its in-car music streaming strategy and it is crashing this stock in the process.
Tesla doesn’t use phone-mirroring systems like Apple CarPLay and Android Auto. The automaker wants to own the entire in-car experience with its own user interface.
When it comes to music streaming, Tesla had a long-term relationship with LiveOne and its Slacker product.
Tesla had long used the offering as a selling point claiming you can “ask your car to play any song.”
In Europe, it had a native Spotify app, which it eventually brought to North America in 2019.
Following offering a native app for the world’s leading music streaming service in all its cars, Tesla gradually added more native apps for music streaming, including Amazon Music, Apple Music, and Titdal.
But the automaker retained its deal with LiveOne to offer its products through its $10 a month ‘Premium Connectivity’ service… until now.
LiveOne announced today its partnership with Tesla has been “amended”.
Here are the changes announced by the company:
- Effective Oct 1, 2024: Tesla replaces streaming button with LiveOne’s in perpetuity
- LiveOne 2.0 launches, providing subscribers access to music on all devices
- 1.9 million subscribers can convert to Premium/Plus services
- Potential 3x increase in Average Revenue Per User (ARPU)
- As of Dec 1, 2024, Tesla will no longer subsidize LiveOne products to some of its customers, however, LiveOne will offer all Tesla customers discounted LiveOne music packages
- Tesla will continue to pay LiveOne monthly for grandfathered users in perpetuity
It sounds like those who had premium connectivity for the life of their vehicles would continue to receive LiveOne’s service subsidized by Tesla, but going forward, all other owners will have to buy a LiveOne Premium or Plus service to enjoy the features inside Tesla vehicles.
Robert Ellin, CEO of LiveOne, made it sound like a positive change in a press release:
“The conversion opportunity has enormous upside by offering Tesla owners an opportunity to upgrade and have access on all devices at discounted priority pricing. We’ll drive growth, unlock new revenue streams, own our data, and increase ARPU. To be conservative, due to the timing of our conversion rate, we are adjusting FY2025 revenue guidance to $120M – $135M and $8-15M adjusted EBITDA.”
However, the company’s stock dropped more than 20% following the announcement.
Electrek’s Take
This makes sense. If you don’t want to go with phone mirroring, you have to offer all the apps in your own system. If you are doing that, it doesn’t make much sense to waste some of the connectivity service revenue on a specific service that not everyone is using.
Personally, I never used any of LiveOne’s services and one of my Tesla vehicles have them included for life.
I use Spotify for most of my streaming needs, and I just use my phone via Bluetooth for the rest.
Am I missing out? Let me know in the comment section below.