This blog will talk about how Spotify competes with traditional and online music providers by reviewing the approaches it uses for different elements of the marketing mix.
- Spotify Strategy For Global
- Spotify Marketing Strategy
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- Marketing On Spotify
Product
Spotify’s core product is free or paid service to stream or download music available through a subscription (Spotify, 2017). Spotify started off a music streaming service but has since added podcasts, it saw the potential of digital value in the music industry instead of people buying CD’s from stores they instead get access to the music online.
Within the streaming service, you have access to their full library this made Spotify a market leader as it was one of the first companies to offer unlimited music rather than pay per song gaining them majority of the market. Comcast mail app for mac. Since they started they have always had a competitive edge over other companies as they were the market leader and their name is associated in consumers’ minds with music streaming services.
Spotify also use individualization and personalization within its product, it offers discover weekly playlist for subscribers where they make a playlist based on the individual person’s music taste. Personalisation can lead to greater customer satisfaction as well as higher profits due to higher customer expenditure (Arora et al. 2008) and therefore gives Spotify a competitive edge. They also use the concept of mass customization (Arora et al. 2008) within their playlist either made by other users or the service itself but this allows subscribers with similar interest to have accessed to playlist that they may like.
Each person is also allowed 1 month free of a spotify premium account. Place: Spotify allows users to use the app on a computer, tablet or mobile phone on any android or Iphone, which is beneficial and gives the opportunity for Spotify to have a larger target market. ITunes only allows apple users to use iTunes, which could be an advantage or a.
Spotify’s service can also be linked to social media such as Facebook, Twitter and Snapchat, it allows users to share their music with friends. This gives Spotify a competitive edge as it allows users to interact with friends and family making the experience personal.
Price
- The mobile technology remains a 'premium' paid-for service, but Spotify returned to free registrations without invitation by 2010. The parent company moved from Stockholm to London, and is now.
- Advantages of Spotify. We are going to list the pros of Spotify first. Spotify Free and Spotify Premium. Let’s start with the fact that Spotify offers free and paid membership. Logically, with Spotify free, you won’t be able to enjoy many features that Premium option offers.
Spotify has different options for price, they have a free subscription that limits what the user can do as well as ads between songs or you are able to pay a monthly fee that allows you to use the service ad free as well as access to additional features such as downloading, and skipping unlimited songs (Spotify, 2017). Spotify uses a freemium pricing strategy which entails offering customers are free sample (Liu et al. 2014) however there is no limit to the free sample unlike others who use this strategy users can continue the free service for as long as they want. Spotify uses this strategy to compete in the market as it knows users are not willing to pay high prices, instead they use this strategy to attract users to then purchase a monthly subscription to gain access to more features. This strategy can also encourage people who would not normally purchase streaming service subscription to do so.
The pricing strategies of Spotify allows it to compete with both free and paid to use services as it is up to the customer to decided what service they will like. Spotify also offers introductory prices an example is 3 months for 99 cents after the 3 months they then charge the regular price. Spotify also offers different prices for different segments such as families, and students allowing it to compete with other music providers by tailoring their service for these segments. The different prices are designed to compete with competitors such as Apple music who also have student prices.
Spotify was the first major streaming service and therefore could price their product wherever they wanted and have kept a similar price from the start and then competitors have had to price their services around Spotify giving it an edge. If competitors were to price above they would have to give additional services for consumers to justify paying the higher price and if they price lower than Spotify consumers will think the services is not as good.
Unlike other music services Spotify has a single price and you get access to their whole library rather than pay per song/ album giving it a competitive edge over competitors.
Promotion
Spotify has very limited promotional activities instead of spending large amounts of money on big campaigns it mainly relies on word of mouth, and co-marketing, their overall promotional aim is to increase awareness (Spotify, 2017). While Spotify offers a product for everyone its promotional efforts are aimed at certain segments in their target market.
Spotify uses social media as one of their main forms of promotion, it has a partnership with Facebook that allows users to show what songs they are playing as well as connect with friends on Facebook through Spotify. https://high-powerhorse491.weebly.com/free-vnc-viewer-for-mac-os-x.html. This has led to word of mouth being spread through one of the biggest social media platforms and because the promotion is coming from reliable sources (other friends) it makes it more memorable and reliable (QUOTE). Spotify also started using twitter for a similar promotional activity as well as keeping users up to date with new features and music on Spotify.
Spotify also relies of celebrity endorsements for promotion, when a new celebrity releases an album it is very likely that they will also release it on Spotify. When the celebrity or big music labels such as Universal or Warner bros promotes a new album as available on Spotify it also promotes the service to the artist fan base.
Spotify is mainly aimed at the mass population which makes their promotional activities easier and cheaper as they can produce one campaign that is likely to attract many people’s attention rather than making multiple campaigns aimed at specific target markets. Often Spotify’s campaigns such as #thatsongwhen (Spotify, 2017) relies on users to do most of the promotion through sharing their experiences with songs but also including Spotify.
Spotify also uses sponsorship of events such as music festivals to promote their service which allows attendees of the event to associate Spotify with music and then be in their mind when deciding what music streaming service to use. This has allowed Spotify to compete in the market as it not only targets a specific market but allows non-users to be exposed to their service.
Place
Spotify is available on almost all technological devices such as laptops, tablets, and smartphones, it is mainly accessed by the internet however an offline option is available for paid subscribers. All you need is the application and then you can use the service, this allows Spotify to be available to consumer 24/7.
Uses for fabric softener sheets. Spotify uses a seller-controlled distribution strategy this involves a single site from the supplier company which allows them to sell their product/ service (Berryman et al. 1998). This strategy allows Spotify to have complete control over their service and therefore gives a competitive edge because the service is delivered exactly how they want.
Spotify decided to cut out the middle man of buying music (the retailers selling CD’s) and instead distribute them directly to customers, this allows them to cut down on costs and therefore can give products at a lower price than competitors giving them a competitive edge.
Physical evidence
The physical evidence is Spotify’s applications or website, since the start they have had a similar website that is easy to use. The layout of their website allows them to compete against competitors because of the ease of use.
People and Process
Spotify uses these services to keep their subscribers happy and differentiate themselves from other competitors. With the help of these two sections it gets users to upgrade from the free service to paid service. Spotify delivers the service through a website and does not use front line people because of their online only presence. Instead they use their social media accounts to interact with users.
Overall Spotify has been a market leader and continue competing against its competitors in almost all aspects of the marketing mix, it uses new and exciting promotional activities, their pricing strategies are not like any other competitors, and they continue to offer the product and service that customers want.
References
Arora, N., Dreze, X., Ghose, A., Hess, J.D., Iyengar, R., Jing, B., Joshi, Y., Kumar, V., Lurie, N., Neslin, S., Sajeesh, S., Syam, N., Thomas, J., & Zhang, Z.J. Spotify not logging in mac. (2008). Putting one-to-one Marketing to Work: Personalisation, customisation and choice. Market Letters, 19, 305-321.
Berryman, K., Harrington, L., Layton-Rodin, D., & Rerolle, V. (1998). Electronic Commerce: Three emerging strategies. McKinsey Quarterly, 1, 152-159.
Douglas, M.O. (1992). Organisational Slack and Risk-taking Behaviour: Test of product pricing strategy. Journal of Organisational Change Management, 5(3), 38-54.
![Spotify business strategy Spotify business strategy](/uploads/1/3/3/9/133936220/384990561.png)
Liu, C.Z., Au, Y.A., & Choi, H.S. (2014). Effects of Freemium Strategy in the Mobile App Market: An empirical study of google play. Journal of Management Information Systems, 21(3), 326-354.
Spotify, (2017). Spotify.com. https://ekoheavenly761.weebly.com/quickbooks-enterprise-2017-download-mac.html. Accessed 2 September 2017. Retrieved from: https://www.spotify.com/au/
In many ways, Spotify enjoyed a spectacular end to 2018.
The company finished the year with its first ever quarterly operating profit – €94m ($107 million) — something that challenged many of the long-term naysayers about its business model. In addition, amid its year-end financial-results announcement, Spotify confirmed that it was set to spend between $400 million and $500 million on acquisitions throughout 2019, including the recent buyouts of podcasting content company Gimlet Media and distribution platform Anchor.
What’s more, Spotify could now hit more than 100 million paying subscribers worldwide by the end of March, having topped 96 million at the end of December, and its day-end share price this week (February 14th) reached its highest point ($146.87) since late October last year.
Things are looking up for Daniel Ek and his green machine — but Spotify still faces a few stark challenges. Here are a few of them.
Its advertising revenues remain unspectacular.
In Q4, Spotify’s revenues from its ad-supported tier reached €175m ($200 million). That represented just 11.7 percent of its total revenue haul of €1.495 billion ($1.7 billion) in the three months.
This was a slight improvement over the percentage of overall revenue that ad-supported sales achieved in Q4 of the prior year (11.3 percent). Yet Spotify continues to make a measly amount from advertising versus the subscriptions paid for by its Premium users, who contributed €1.32 billion ($1.5 billion) in Q4. That’s more than seven times the cash generated by ads.
One way Spotify hopes to accelerate growth in advertising is podcasts (which we’ll come back to). That’s partly because the company believes it can double-dip: It’s already embedding audio ads in podcasts listened to by both its “free” users and its paying subscribers (the latter group typically avoids marketing content).
Furthermore, Spotify CFO Barry McCarthy told investors on February 6th that self-serve advertising, whereby clients upload their own ads and target audiences themselves, is now “our fastest-growing [ad] channel.” Spotify Ad Studio, the firm’s self-serve platform, is currently available to varying degrees in markets including the U.S., U.K. and Canada, ahead of an expected wider global rollout.
“[We] continue to invest aggressively from an R&D perspective in growing [self-serve],” said McCarthy on Spotify’s Q4 earnings call. “We need that channel to be successful for us over time in order to right-size our cost structure, but we’re starting off a very small base.”
Cracks are beginning to show in Spotify’s relationship with the record labels.
Is spotify free in india quora. There have long been whispers in the background from record companies that they are unhappy with some of Spotify’s moves. The major labels’ biggest bugbears have included Spotify’s declining Average Revenue Per User (ARPU), in addition to the platform striking direct licensing and distribution deals with artists. Now, though, these concerns are really starting to bubble to the surface.
Speaking to investors on an earnings call on February 5th, Warner Music Group CEO Steve Cooper stopped short at mentioning Spotify by name — but his growing frustration with some of the service’s practices was seemingly apparent.
First, Cooper (pictured) tackled the growing trend for Spotify (and other services) to ink direct deals with artists, cutting out labels. “It’s important to remember that [streaming services] are not organized to create value for artists, they are not organized to create artist careers,” said Cooper.
“Presumably [streaming services] will not steer [the popularity of cheaper music], which I’m sure you’ve seen complaints of already — where music is popping up in people’s playlists and they don’t know how it got there.”
Steve Cooper, WMG
“If you look at what we invest in our artists’ careers, A&R, marketing and promotion, it is a meaningful high-nine or low-ten-figure number [quarterly].”
He also accused such platforms of “utilizing sources of music outside of the major [labels] in the hope of lowering [the overall royalty rate paid out to rightsholders].” He called on Spotify et. al not to deliberately steer customers to this cut-price independent music via first-party playlists.
Said Cooper, “I think we will continue to see streaming services try to move to lower-margin products. . . . Presumably [streaming services] will not steer [this], which I’m sure you’ve seen complaints of already — where music is popping up in people’s playlists and they don’t know how it got there.”
That was a blatant reference to recent reports of mysterious plays of suspicious tracks appearing in Spotify user play-counts, despite these users saying they’ve never heard these songs before. Did Steve Cooper just suggest Spotify itself could be to blame?
A potential struggle to keep up momentum.
Spotify’s 2018 saw the company add 25 million paying subscribers around the world. That was up on 2017, when it added 23 million paying subs.
Spotify Strategy For Global
Spotify appears likely to have bested Apple Music, globally speaking, in the year. Apple’s Spotify rival counted 40 million paying subscribers last April, according to the Cupertino giant’s Eddy Cue. And, according to Apple CEO Tim Cook, speaking on the firm’s earnings call last month, the platform counted “over 50 million paid subscribers” as of January 28th.
Spotify’s bold prediction for 2019 is that it can repeat the trick: It’s projecting that it will add anywhere between 21 million and 31 million subscribers by the end of this year. Its biggest challenge, however, is exactly where these subscribers are going to come from.
Spotify’s fiscal reports show the percentage breakdown of where its paying subs reside. In terms of the year-end of 2018, that went like this: Europe, 38.4 million; North America, 28.8 million; Latin America, 19.2 million; and the rest of the world (ROW), 9.6 million.
Judging by prior financial reports, Spotify added just 2.1 million subs in ROW in the last six months of 2018, or around 350,000 per month. In a region housing billions of potential customers, that was . . . unspectacular.
Analysts at MIDiA Research have predicted that 2019 will likely be the year that streaming subscription growth slows in the North America and Europe — meaning that Spotify will really need to up its game in the Middle East and North Africa (MENA) region, where it launched in November.
It will also need to launch successfully in India, where 1.3 billion potential customers reside, but where Spotify’s arrival is currently being delayed by major labels refusing to grant it vital licensing permissions.
Spotify Marketing Strategy
Its less-than-positive economics.
Spotify connecteddrive app. Spotify might have posted an unusual operating profit in Q4, but across the full year of 2018, it was a loss-maker yet again. In fact, in a year-end SEC filing, Spotify revealed that, since its inception, in April 2006, it has incurred “significant operating losses,” which, as of December 31st, 2018, amounted to an accumulated deficit of €2.51 billion ($2.8 billion).
The firm’s FY operating loss in 2018 stood at €43 million, narrowing considerably on the €378 million it suffered in 2017. Yet in its forecast for 2019 — partly due to that acquisition budget of $400 million-$500 million — Spotify is projecting another annual operating loss of €200 million to €360 million.
Daniel Ek will hope that Wall Street continues to buy his reasoning for this loss-heavy trend: that Spotify must now perpetually invest heavily in global expansion, marketing and product quality in order to consolidate its number-one market position, and lay the pathway for future profits.
Some investors, however, may point to Spotify’s own SEC filings, which warn, “[We] cannot assure you that the growth in revenue we have experienced over the past few years will continue at the same rate or even continue to grow at all. We expect that, in the future, our revenue growth rate may decline because of a variety of factors, including increased competition and the maturation of our business.”
Its untested reliance on podcasts.
Spotify has reportedly just paid more than $200 million to acquire New York-based podcasting production company Gimlet Media, in addition to podcasting distribution house Anchor. If this wasn’t indication enough that Spotify is banking its future on the spoken word, Ek told investors this month that his company expects more than 20 percent of listening on Spotify will be dedicated to podcasts, rather than music, in years to come.
One key factor to achieving this objective, said Ek, is exclusivity, although he acknowledged only future Gimlet Media productions will be exclusive to Spotify — existing content from shows such as StartUp, Reply All, Homecoming and Mogul will remain widely available. So how can Spotify use podcasts to improve its financial numbers as time wears on? Ek was asked this precise question on the Spotify Q4 earnings call.
“If I could draw a Netflix analogy, when we launched [original content creation] at Netflix, first year, we spent [$50 million on it], and then every year after that we doubled it… There are many similar analogies that have the opportunity to play out here as well.”
Barry McCarthy, Spotify (pictured, main)
![Free Free](/uploads/1/3/3/9/133936220/938813517.jpg)
“Having great content is the long and the short of it,” he replied. “If we can drive a virtuous cycle, we’ll win; if we can’t, we won’t. And virtuous cycle [here] means investing in content that people engage in [and] seeing overall engagement increase. . . . Because [people are] excited, they tell more friends about the service, so your mix of paid versus free acquisition shifts in favor of free [and] your subscriber acquisition cost goes down.”
It’s interesting to note that both Ek and Barry McCarthy made Netflix analogies about Spotify’s podcasting potential in the wake of the Gimlet and Anchor deal, referencing the financial advantages of being a streaming service that is also a content creator. That’s a comparison Ek has tended to avoid in the past, presumably for fear of upsetting major music rights-holders.
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Said ex-Netflix exec McCarthy, “If I could draw a Netflix analogy, when we launched [original content creation] at Netflix, first year, we spent [$50 million on it], and then every year after that we doubled it. . . . [This] greatly enhanced the value proposition for users, and over time it shifted the [company’s] cost structure from variable to fixed. There are many similar analogies that have the opportunity to play out here as well.”
The above article originally appeared on RollingStone.com through here. MBW has entered into an ongoing global content partnership with Rolling Stone and Penske Media Corporation.Music Business Worldwide