Spotify Marketing Report

Transcription

1 1 Executive Summary The aim of this report is to summarize the brand image and appeal of the music streaming service, Spotify, by investigating its customer base, competition, image, and marketing strategy. Spotify is a music streaming service that is home to over 70 million paid subscribers listening to music from a library of over 40 million songs. Spotify has been a streaming service of choice for many over a decade, and this report attempts to evaluate how it has become one of the biggest music streaming powerhouses in the business. When researching information on its customers, competitors, and advertising techniques, data was collected from a variety of sources including blogs, articles, websites, and forums. Specific information on the generational and geographical use of Spotify was researched, as well as information on specific advertising expeditions carried out by the music streaming service. Within the report, many particulars are discussed; however, several key findings within the Spotify brand are apparent. When it comes to its customer base, the majority of Spotify users are year olds living in North America or Europe. The main competitor of the company is Apple Music, which has considerable funding to go along with its fast growing music streaming service. Advertising of the Spotify brand is very basic, with only a few campaigns launched such as billboards and simple advertisements; however, the brand has been successful with its advertising as it is both personable and simple. Overall, the brand is continuing to grow in customer base despite the presence of emerging music streaming competitors. In an effort to keep from being overtaken by these competing services, Spotify should attempt to diversify its advertising techniques and keep hold of its already existing users.

2 2 Spotify Marketing Report

3 3 Table of Contents What is Spotify?... 4 History of Spotify Customers of Spotify Competitors Advertising Conclusion 8 Marketing Communications Appendix Referencing

4 4 What is Spotify? Spotify is an online music, podcast, and video streaming platform that contains a library of over 40 million songs from various artists. 1 Spotify allows users the opportunity to access music more efficiently, all the while promoting the act of discovering new music. With Spotify, no matter where one may be in the world, they are able to access their music, whether it is from a smartphone, tablet, or desktop computer. It s mobility, efficiency, design, and library of songs is what draws many to the company and the music it provides. History of Spotify With Spotify, the main praise from the general public is its flexibility. Users are able to play what they want, when they want, and many of them cite the streaming service as having no bounds. 2 Furthermore, many users of the service like that it promotes not only mainstream artists, but also artists that may fit more into niche categories. In this way, users are able to discover more music that may not be on other music listening platforms. 2 Spotify launched on October 7, 2008, and was founded by Swedish nationals Daniel Ek and Martin Lorentzon. 3 In 10 years, the company went onto the New York Stock Exchange and gathered a valuation of around $26.5 billion. 3 1 Spotify, What is Spotify? Available from: < 2 Genius, Why do people like Spotify so much? Available from: < [May 6, 2018]. 3 Parsons, J., History of Spotify: how the Swedish streaming company changed the music industry. Available from: <

5 5 Customers of Spotify When looking at the customers that use Spotify, a major split can be seen in the demographics of its users. According to the chart created by The Statistics Portal 4, 21% of Generation Z (18-29) uses the service several times a day, highest of all the age demographics, with only Generation X and Y (20-44) being the closest with 15% usage. In contrast to using the service several times per day, those that do not have an account altogether comprise mainly of the Baby Boomers and Builders (55+) generation. This chart shows that the bulk of Spotify users are 30 or younger, with the majority of its members using the service more than once a day. Spotify also contains a wide range of listeners from all across the globe. The streaming service has launched in over 50 countries across Asia, Latin America, North America, Africa, and Oceania, 5 becoming accessible to millions of people from different backgrounds. In 2017, Spotify had the majority of its user base in Europe (37%), followed by North America (32%), and Latin America (21%), with the rest of the world only comprising of 10% of users. 6 However, although the largest percentage of people using Spotify is in Europe, the largest population of users is in the U.S. 7 While the demographic and geographic variables displayed tend to narrow the individuals who use Spotify, the differing lifestyles and behaviour of people across the world doesn t become a boundary, but rather an advantage for the streaming service. With over 40 million songs, no matter the background or musical preference, Spotify provides what nearly 4 Statista, Spotify: frequency of use in the U.S. by age 2017 Statistic. Available from: < 5 Spotify, Where is Spotify available? Available from: < 6 Statista, Spotify share of monthly active users by region worldwide 2017 Statistic. Available from: < 7 Quora, Which country has the largest active Spotify user base? Available from: <

6 6 anyone who enjoys music would want. 8 This is very helpful for the service as instead of only being able to focus on listeners who enjoy rap music for example, it is able to cater to a wide range of musical tastes. Competitors When it comes to music streaming services, without a doubt, the main focus of Spotify should be on the threat of Apple Music. Backed by Apple Inc., Apple Music is a comparable music streaming service boasting a library of around 45 million songs 9 as well as the funding from a company worth over $900 billion. 10 When it comes to subscribers to each respective service, Spotify has more with over 70 million paying subscribers compared to Apple Music s 30 million. Although Spotify claims more subscribers throughout the world, Apple Music is now growing at a faster rate within the United States than Spotify and is even expected to overtake Spotify in United States subscribers. 11 Furthermore, although the user base of Spotify is larger, Apple Music has the ability to reach more people. Apple Music is available in 114 countries compared to Spotify s 60, including major nations such as China, Russia, and India. 12 This means that the appeal of Apple Music is even 8 Spotify, How many songs are there in total on Spotify? Available from: < 9 Casey, H.T., Apple Music vs. Spotify: Streaming Services Compared. Available from: < [May 6, 2018]. 10 Shen, L., Apple Is Now Worth Over $900 Billion. But It Won't Be the World's First Trillion Dollar Company. Available from: < 11 Liptak, A., Apple Music is set to surpass Spotify in paid US subscribers this summer. Available from: < 12 Sanchez, A., Apple Music Is Available in 59 Countries That Spotify Isn't. Available from: <

7 7 stronger in 59 countries that don t have the option of choosing Spotify for their music streaming services. With Apple Music already established in 59 more countries than Spotify, many users will not make a switch to Spotify if and when it becomes available within a once non-serviced country, posing a threat to the ability of Spotify to expand. While Apple Music is the clearest threat to Spotify, Tidal, another music streaming service, also threatens to take users away from Spotify. Co-owned by rap mogul Jay Z and boasting around 3 million users 13, the streaming service s appeal comes in the form of its exclusive content. With exclusive content such as Beyoncé s Lemonade, and early releases for albums such as Kanye West s Life of Pablo, users that value listening to content as soon as it s released will be drawn to Tidal. 14 Although the reach of Tidal is not as large as Spotify s, it does pose a threat of taking away a niche market of Hip/Hop and Rap fanatics away from Spotify. Advertising The main draw of Spotify and the way in which it attempts to position itself within the market is focused on its useability and its capability of making people feel connected to music. The company has done this in the past by placing outdoor ads that contain data curated from Spotify itself. 15 For example, one of their billboards read Dear person who played Sorry 42 times on Valentine s Day, what did you do? Spotify uses humour in this relatable way to make us all feel connected to the music we listen to. These outdoor billboards have been one of Spotify s main advertising projects and have taken place all over the world, including Australia, displaying facts that are relevant to 13 Aswad, J. & Trakin, R., As Spotify Prepares to Go Public, How Do Its Competitors Measure Up? Available from: < [May 6, 2018]. 14 Blanco, X., reasons to ditch Spotify for Tidal. Available from: < 15 Orcan Intelligence, How Spotify Used Big Data For Their Global Outdoor Ad Campaign. Available from: <

8 8 life down under. For example, a billboard stating Ralph You re Not A Kangaroo is a playlist. Also a real wake-up call for Ralph popped up in Australia. 16 This idea of Spotify attempting to unite potential clients under the assumption that music is special and within all of us has been an advertising technique by the streaming service from the start. Their first television advertisement title Spotify For Music 17, first appearing in 2013, was produced with this same mindset in place: music is special and Spotify is the one that can deliver this music. In placing itself as an advocate for music that is tailored from person to person and not for a mass audience, Spotify attempts to position itself as a music streaming service that is both trendier and of higher quality than its competitors, such as Apple Music. Conclusion To sum up the Spotify brand, it can be described as an established company at the top of the music streaming service industry. Although they are facing competition from heavy competitors such as Apple Music and Tidal, there is still a fair bit of time before any competitor catches up to the resources and user base that Spotify holds. With creative ads that position Spotify atop the music streaming industry as a trendy and affordable music outlet, Spotify will continue to be a music streaming powerhouse for many years to come. 16 Bruce-Smith, A., Extremely Good Spotify Ads Are Popping Up All 'Round Australian Cities. Available from: < 17 Rey., J.D., Watch: Spotify to Launch TV Ad Campaign Tonight on 'The Voice'. Available from: <

9 9 Marketing Communications The Guilty Pledgers App, created by Spotify in 2014, was a way for the organization to promote 13,000 charities and the donation of money to their causes. The way it worked was simple. A user would pledge to donate to one charity out of the provided 13,000 and in turn Spotify would allow the donator to add a song of his/her choice onto a public party playlist for the music streaming service. 18 Above is an imagined public relations article by Spotify that alerts the public of their partnership with the charities it is supporting. This public relations article is perfect for the image of the Spotify brand, as nearly all consumers are looking to back a business that gives back to the community. In relation to the customers of Spotify, which are primarily year-olds, the article would deeply impact these individuals as 84% of millennials give to charitable organizations. 18 With so many 18 Notte, J., Why Millennials Are More Charitable Than the Rest of You. Available from: <

10 10 millennials giving to charity, Spotify would be able to earn considerable donations from their target market, especially while using the creative Guilty Pledgers App, which makes giving fun and exciting. This public relations article will almost certainly reach the target millennial audience as 18 to 29 year olds are the most likely age group to have read written content in a given year, including website articles such as the proposed one. 19 Furthermore, many millennials keep track of news that is of interest to them. With many music fans reading over music-related stories daily, an announcement such as this PR article by Spotify would most definitely pop up on many music digestion websites such as Complex.com and pigeonsandplanes.com, which have a strong influence on readers. Sponsorship is a major part of the marketing communication, and above is a designed sponsorship by Spotify of a very popular National Basketball Association (NBA) team, the Golden State Warriors. The sponsorship would be displayed on the players jerseys. Spotify, as mentioned constantly, targets millennials. Millennials particularly love sports and are a generational group that greatly values live events, with 90% of millennials 19 Howe, N., Millennials: A Generation Of Page-Turners. Available from: < howe/2017/01/16/millennials-a-generation-of-pageturners/&refurl=&referrer=#7bcaf1f51978>

11 11 attending at least one live event within the last year 20. With such a high rate of millennials attending live events such as NBA games, Spotify s sponsorship of the Golden State Warriors would allow the brand exposure to a generational group that attends games the most. Furthermore, with Spotify facing heavy competition from Apple Music in the United States, the sponsorship with an American professional basketball team would help position the brand as trendier in the mindset of its American market. In addition to potentially drawing customers away from Apple Music, Spotify s sponsorship of the Warriors would also allow the company to attract those that do not already subscribe to a music streaming service and are fans of the Warriors. Appendix: Grate, R., New Data on Millennials Reveals What Draws Them to Events. Available from: < [May 6, 2018]. 21 Archanco, E., The strategic importance of Apple Music. Available from: < [May 7, 2018]

12 12 Positioning Graph of the Spotify Brand vs. Competitors Typical Spotify Advertisements 15 16

13 13 4 SPOTIFY S.W.O.T ANALYSIS Strengths Large user base (70 million +), huge library of songs (40 million +), relatively few competitors. Weaknesses Bad reputation when it comes to paying artists, no exclusive material. Opportunities Opportunity to expand its advertising by potentially diversifying its campaigns, such as venturing into sponsorship. Threats Although it has few competitors, its competition is strong with an Apple Inc. Apple Music and Jay Z backed Tidal.

14 14 References: Archanco, E., The strategic importance of Apple Music. Available from: < [May 7, 2018] Aswad, J. & Trakin, R., As Spotify Prepares to Go Public, How Do Its Competitors Measure Up? Available from: < [May 6, 2018]. Blanco, X., reasons to ditch Spotify for Tidal. Available from: < Bruce-Smith, A., Extremely Good Spotify Ads Are Popping Up All 'Round Australian Cities. Available from: < Casey, H.T., Apple Music vs. Spotify: Streaming Services Compared. Available from: < [May 6, 2018]. Genius, Why do people like Spotify so much? Available from: [May 6, 2018]. Grate, R., New Data on Millennials Reveals What Draws Them to Events. Available from: < [May 6, 2018]. Howe, N., Millennials: A Generation Of Page-Turners. Available from: < howe/2017/01/16/millennials-a-generation-of-pageturners/&refurl=&referrer=#7bcaf1f51978> Liptak, A., Apple Music is set to surpass Spotify in paid US subscribers this summer. Available from: <

15 15 Notte, J., Why Millennials Are More Charitable Than the Rest of You. Available from: < Orcan Intelligence, How Spotify Used Big Data For Their Global Outdoor Ad Campaign. Available from: Parsons, J., History of Spotify: how the Swedish streaming company changed the music industry. Available from: < Quora, Which country has the largest active Spotify user base? Available from: < Rey., J.D., Watch: Spotify to Launch TV Ad Campaign Tonight on 'The Voice'. Available from: < Sanchez, A., Apple Music Is Available in 59 Countries That Spotify Isn't. Available from: < Shen, L., Apple Is Now Worth Over $900 Billion. But It Won't Be the World's First Trillion Dollar Company. Available from: < Spotify How many songs are there in total on Spotify? Available from: < Spotify, What is Spotify? Available from: < Spotify, Where is Spotify available? Available from: <

16 16 Statista, Spotify share of monthly active users by region worldwide 2017 Statistic. Available from: < Statista, Spotify: frequency of use in the U.S. by age 2017 Statistic. Available from: <