Research Project. SUBASIC RESEARCH! Jake Pflum! Stephanie Martinez! Richard Escobar! Anh Nguyen! Ajla Subasic

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1 Research Project SUBASIC RESEARCH Jake Pflum Stephanie Martinez Richard Escobar Anh Nguyen Ajla Subasic

2 Table of Contents Statement of the Problem 3 Literature Review 4 Research Questions & Hypotheses 5 Method 6 Data Analysis 7 Hypotheses Analysis 11 How We Could ve Done Better 12 References 13

3 3 Statement of the Problem Today s music industry looks to generate revenue in a technologically-forward society where users are no longer purchasing music through tangible means. Spotify is seeking to establish an alternative and legal way for users to listen to music with the freedom of streaming but with the legitimacy of purchase. Their ad-supported and subscription funded service offers users full-access to a 20 million song library and gives listeners the ability to listen to music freely while also contributing financially. We will be observing the position of Spotify in the music industry and whether or not it is changing the way people listen to music. Knowing the answers to this question will benefit Spotify in establishing itself in its competitive market and to determine how to adjust for growth in the future.

4 4 Literature Review Spotify is a music streaming service which offers alternative and legal ways for users to listen to music. Spotify allows for users to build personalized radio stations and playlists, through both free and paid subscriptions. This music streaming service offers users an opportunity to socialize through music by allowing them to share music on various social media sites such as Facebook and Twitter (Spotify, n.d.). Spotify s target market mainly consists of traditional early adopters and opinion leaders which includes tech-savvy, music enthusiasts, musicians and record labels. 50 percent of users are ages 18-34, and 24% of Spotify s users are from households making roughly $100,000. Nearly 3 in 5 of Spotify s web visitors are males (Lipsman, 2011). Spotify s main competitors are Pandora and itunes Radio. Pandora is considered the leader in internet radio with more than 76.2 active monthly users. Unlike Spotify, Pandora users do not have the option to select individual songs to listen to, instead Pandora selects song based on the users music channel preferences (Couts, 2013). itunes Radio is significantly less expensive than Spotify at $25 a year. Like Pandora, itunes radio does not allow users to choose which song they will listen to, instead songs are randomized and based on the user s preferences (Devine, 2013).

5 Research Questions & Hypotheses Our research will revolve around three main points of focus: 5 1. How does Spotify match up to its competitors (physical sales, itunes, etc.)? 2. Is Spotify preferred among its target publics? 3. Is Spotify long-lasting, or a fad in a constantly-evolving technological environment? We are looking to observe how the target publics consume music in today s environment. With so many options, we are interested in seeing how Spotify measures up against its competitors, specifically if it is a preferred service. We hypothesize, based on existing research, that: 1. Spotify is not number one in target consumer usage in comparison to its competitors. 2. Spotify is the preferred music streaming service used by individuals between the ages of who fall into the psychographic categories of the organization s target market. 3. Spotify has a strong user loyalty, with minimal chance of their users moving to another service. Answering our research questions will be of benefit to a number of publics and organizations. It will be of benefit to Spotify, as it will explicate the purchasing habits and behavior of their key publics. It will demonstrate their performance in the competitive market, and hopefully provide information as a reference on how to grow and improve in the future. The data would also be useful for Spotify s competitors, as it would demonstrate the listening habits of their current users, and how they match up to Spotify, one of their largest competitors.

6 6 Method For our research method we plan to create a survey that asks closed-ended and forcechoice questions about the music purchasing habits of college students, since they fall under the target market category for Spotify. Questions we will ask include: 1. Which of the following best describes your music purchasing habits? 2. Do you prefer to use pay-per-song music services (i.e. itunes) or subscription-based music services (i.e. Spotify)? 3. Which of the following music services do you prefer? The survey will be created through Survey Monkey, a web survey development service that allows users to distribute surveys online and that analyzes the results. We are choosing a web-based survey, as opposed to the many alternatives means to gathering quantitative data, because of the level of convenience it provides for respondents: rather than organize a series of group meetings to administer an in-person pen and paper survey, a web-based collection method will allow for the survey to be taken from anywhere. Also, an online survey technique eliminates hours of tedious data entry and coding hard copy surveys. Since our research team does not have research assistants or interns, any way to save some extra time will help. This also prevents any type of intercoder or intracoder errors in validity; since the data is transposed by the survey service upon each respondent s completion, there is no need to worry about errors in validity during the coding stages. A web-based survey will provide our research team with visual analytics and instant results, which will assist in our team s analysis and interpretation steps of this study. While these can be created on our own, the convenience of the web-based service is appreciated. Once created, we will post the link on various platforms, such as Facebook, Twitter and through to reach college students. We do not have the funds or technology to successfully achieve a purely random sample; in fact, very few professional researchers are able to isolate a definitively random sample of participants. Our sample is one of convenience.

7 7 Data Analysis Most of the respondents purchased music from a digital retailer (i.e. itunes, Amazon, Google Music, etc.) (42%). The other majority reported that they do not purchase music (36%). Less than half of our respondents subscribed to a music streaming service (33%). It proves that the least popular habit when it come to purchasing music is from a physical store (19%).

The survey found out that our audience preferred subscription-based services (44%), and the 8 other majority does not prefer a subscription-based or pay-per-song music service (31%).

8 The survey found out that our audience preferred subscription-based services (44%), and the 8 other majority does not prefer a subscription-based or pay-per-song music service (31%). The least popular response was the pay-per-song music service (23%). When asking which music service was used in the past, respondents answered with the most responses to itunes and Pandora. (84%). Spotify was the one with the third most. (48%). The least popular choices that our respondents used in the past were Rdio (12%), Google Play Music All Access (7%) and Beats Music (1%).

9 When finding out how many hours our respondents listened to music, we discovered that most of our respondents listen to less than two hours of music per day (35%).

9 9 When finding out how many hours our respondents listened to music, we discovered that most of our respondents listen to less than two hours of music per day (35%). Two through four hours of music was the next strongest answer from our respondents (31%). It shows that not many of our respondents do not listen to a lot of music in one day (13%). When asking respondents which music service they currently use, itunes (63%) and Pandora (62%) were still the most popular choices. Once again Spotify came in third (33%). The least popular choices were the same as the previous question, Rdio (7%), Google Play Music All Access (3%) and Beats Music (.56%). Quite of few respondents chose they did use any of the services that were suggested (5%).

There were respondents that didn t prefer none of the choices (6%).

10 10 The most popular choice for which music service our respondents preferred was Pandora (42%). The next choice was Spotify (26%). Rounding out the next choices are as follows: itunes (21%), Rdio (1%), Google Play Music All Access (1%). There were respondents that didn t prefer none of the choices (6%). It seems that most of our respondents prefer to use a subscription-based music streaming service that is free of charge (68%). The next bulk of our respondents do not use a subscription-based music streaming service (20%). The lowest possible choice was that our respondents are not premium members of our service (11%).

11 Our respondents are overwhelmingly willing to try a new music service (82%). Hypotheses Analysis 1. Spotify is not number one in target consumer usage in comparison to its competitors.

11 11 Our respondents are overwhelmingly willing to try a new music service (82%). Hypotheses Analysis 1. Spotify is not number one in target consumer usage in comparison to its competitors. Off to a good start. We were correct in our hypothesis here. By and large, Spotify is third in almost every category where it faced its competitors. itunes (63%) and Pandora (62%) were used currently by the majority of our respondents, and Pandora (42%) was the preferred service based on our data. 2. Spotify is the preferred music streaming service used by individuals between the ages of who fall into the psychographic categories of the organization s target market. In our respondents submissions, we found that Spotify (45%) came preferred second to Pandora (62%) from users in the target public ages range, with Pandora coming in at third. It was interesting to be able to compare this data to the responses from users outside of this age range. Our team noticed that those older than the target group preferred itunes (33%) at a higher rate. We failed to confirm our hypothesis here.

12 12 3. Spotify has a strong user loyalty, with minimal chance of their users moving to another service. Again, we have failed to find data that confirms this hypothesis. In fact, our data shows that our respondents are overwhelmingly willing to try a new service, with 82% of respondents claiming that they would. This data fails to confirm our belief that Spotify users are unfailingly loyal, and that they will stick to their current service, rather than try out the newest one. Areas of Improvement We could have had focus groups to find out an explanation of why other music services are preferred over Spotify. We could have had a larger sample size and it could have been more focused toward the target market we were trying to evaluate. We were very limited with the data collection service we used and so we could have used a different service that would have allowed us to gain more information. One of the limitations of the service we used was the amount of questions we were allowed to ask. Had we used a different service, we would have been able to ask more than 10 questions and thus, gained more information.

13 References Couts, A. (2013, December 3). Spotify vs. Pandora vs. Grooveshark. In Digital Trends. Retrieved February 27, 2014, from Designtechnica Corporation website: Devine, R. (2013, December 14). itunes Radio vs Spotify free: Which free mobile music service is best? In imore. Retrieved February 27, 2014, from Mobile Nations website Lipsman, A. (2011, October 18). Spotify Makes a Splash among U.S. Early Adopters [Weblog post]. Retrieved from Spotify_Makes_a_Splash_among_U.S._Early_Adopters About Spotify. (n.d.). In Spotify.com. Retrieved April 22, 2014, from Spotify website:

Music, Radio & Podcasts

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