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There are more than 345 million users and 155 million subscribers. Among music streaming apps such as Apple Music, Amazon Music, Google Play, Youtube Music, and among others, Spotify has one of the highest market shares of 32-34 percent.
Spotify Marketing Strategies - Sound of Success
Have you ever wondered how does Spotify amass such a massive user base? Spotify’s journey has not been easy, but despite facing backlash from Taylor Swift, a global icon in the music industry, and being embroiled in a data leak controversy, the platform is leading. Spotify marketing plan differentiated them from others and made them market leaders.
So, let us delve into Spotify’s music marketing strategy to learn the secret to its success.
Spotify's introduction to the world of music?
Spotify’s musical journey began as a labor of love. Daniel Ek, the founder, and CEO of Spotify, has always been a music enthusiast. However, his journey and plan towards establishing a music career did not go as planned. Martin Lorentzon and Daniel Ek founded Spotify on 23 Apr 2006.
Spotify comprises the words ‘Spot’ and ‘Identify.’ Daniel and Martin just came up with random names for their streaming platform. Spotify was a misheard word by Daniel that became the platform’s last name.
Spotify was founded in 2006, but it did not go public until 2008. Since then, it has provided podcasts, music videos, and songs to music fans. Today, Spotify is the most famous music streaming app globally, thanks to a combination of passion, problem-solving, and, ultimately, a love of music.
Spotify Business Model
Spotify’s premium experience heavily relies on its music algorithms and its community of users and artists. Its premium subscriber base has increased from 10% of total users in 2011 to 46% in 2018.
Spotify saw itself from the Beginning as a legitimate replacement to music piracy and purchases iTunes paid songs. Even Spotify pays a significant portion of its revenue to music labels in the form of royalties. Since its inception in 2006, it has spent nearly $10 billion in royalties.
Attract and Gain a large user base with free services
Users of Spotify’s free music streaming service have access to a catalogue of millions of songs. The free service has limited functionality, and users must listen to advertisements that partially subsidize the free service.
Free Users to a Premium Value Proposition
Spotify has had a lot of success converting free users to paid users. Its premium service includes additional features and does not include advertising. In 2018, 46 percent of Spotify’s users were premium users, who account for 90 percent of the company’s total revenue.
User Retention
A user’s lifetime value (LTV)-How much amount that Spotify can earn from a user over time—increases the longer the company can retain users, as it does in any subscription model. This is referred to as managing customer churn. Spotify’s premium subscriber churn rate fell down to a record low of 4.6 percent in the first half of 2019.
Balance Cost of Free and Premium
Spotify pays record labels approximately 52% of the revenue generated by each stream. Over 85% of music streamed on Spotify comes from four record labels: Sony, Universal, Warner, and Merlin. In 2018, Spotify paid €3.5 billion in royalties to premium users and €0.5 billion to free users, accounting for 74% of total costs.
Revenue Stream from Premium
The freemium model is unique in that you must cover the costs of both free and paying users. Spotify’s user base exceeded 248 million in 2019, necessitating the payment of royalties. 54 percent of those users listen to (limited) free music.
Spotify Marketing Strategy
Spotify’s marketing strategy is not static; it is constantly evolving. Even Spotify’s marketing strategy 2022 is an evolved version of the 2021 marketing strategy. Not just Spotify following the latest trend; it’s also inventing new ones to promote itself. So, let’s take a look at Spotify marketing strategy.
Social media Marketing
If you enjoy music, you should check out Spotify’s social media accounts. The music streaming platform publishes information about various artists and new album releases in the music industry.
Spotify has different social media handles based on where you are in the world. The brand emphasizes consistent spotify branding strategy across all of its pages.
To raise brand awareness, the platform also runs various hashtag campaigns and social media trends. In addition, the brand works with social media influencers and runs sponsored ads in which the influencers promote the brand in their unique way.
"2018 #tag Objectives"
Although it is no longer as popular, using the hashtag “#goals” on social media posts was popular in 2017. Spotify, which had grown by nearly 40% in the previous year, decided to cash in on the social media trend.
The company launched its “2018 Goals” campaign at the end of 2017, a sly dig at social media users. The 2017 campaign, like the 2016 marketing push, drew international attention.
Data-Driven Marketing Campaign
Spotify has mastered the art of selling by leveraging data from its streaming platform. The company creates marketing content by utilizing its music records. As a result, Spotify is using Spotify to sell Spotify.
Meme Marketing
Spotify understands how to connect with its target demographics, Gen-Z and Millenials. And what better way to reach Millenials and Gen-Z than with Memes?
Marketers widely use the meme marketing strategy to make their audience laugh while also selling their brand. Even Spotify also uses this strategy to connect with its target audience.
While most brands use social media platforms, Spotify opts for traditional media combined with unconventional marketing communication. Billboards are an unusual form of marketing media, and Spotify creates billboards that include memes. As a result, Meme marketing is how the music label pitches its target customers.
Penetrative Marketing
Affordable Premium Price
Spotify also has a subscription-based model where users can download songs and stream music without being interrupted by advertisements. It is the premium version of Spotify, which is a paid version. Users will find the pricing of its subscription base model to be quite reasonable. That is how it obtained its 155 million subscriber base.
Spotify Subscription model
A great feature of its subscription model is that it provides users with a one-day subscription for as low as ₹7, allowing them to stream music ad-free and download up to 30 songs.
Prepaid premium plans, family premium plans, student premium plans, and premium duo plans are all available on the streaming platform. Even their premium pricing is affordable for users, so they love Spotify.
Personalized Marketing
When a brand provides a personalized experience to its customers, it is unquestionably a success. That is the key to Spotify’s success. When a user installs and uses Spotify for the first time, the app provides a personalized experience. Users can choose what type of music and artists they want to listen to.
Spotify marketing strategy includes user-based content and personalized advertising. Spotify has completed a feature that has been in place since 2017 and has been an enormous success. Every year, Spotify promotes this feature with hashtag campaigns such as #2020Wrapped and #2019Wrapped.
Spotify Wrapped is a feature that reports on what a user has listened to on Spotify for over a year. It shows the user’s preferences, favorite artists, the number of songs listened to in a year, and time spent on the app. As a result, the streaming platform connects with users more personally.
Event Marketing - (Spotify's Global Marketing Strategy)
Spotify marketing strategy also includes event marketing, which it uses to pitch large audiences. Spotify is the sole audio services provider for Riot Games’ “League of Legends” esports. It is a multi-year agreement and Spotify’s first global paid sponsorship deal. League of Legends is a massive event.
Spotify will add music, podcasts, and playlists inspired by the gaming community to the League of Legends official music hub on Spotify, which has 5 million monthly listeners.
Spotify's other initiatives to become successful.
Brand Endorsements
A brand that attaches with millennials and Gen-Z requires an ambassador who can do the same. As a result, the music streaming service discovered the ideal brand ambassador for Spotify in India. The famous actor Anil Kapoor and Nagarjuna Akkineni promotes the brand, and Spotify wanted him to endorse the brand because of his ability to connect with youths and all others.
Enhance User Experience
When a brand provides a service on a digital platform, it must prioritize the user experience. Spotify’s user-friendly in-app features are right on target. Most music apps have too many options, but Spotify has a simple design that improves the user experience. Even the free version appears to be a premium version. The best thing about the app design is that there are no ad pop-ups, and even the ads that play in audio are interactive and do not annoy the users. So Spotify understands how to keep things simple while still making an impact.
To Conclude with Spotify Marketing Strategy
So that’s the end of Spotify Marketing Strategy. There’s a lot that all brands can learn from Spotify. To be at the top, a brand must put in a lot of effort, especially marketing. Marketing can propel any brand from obscurity to prominence.
Spotify’s lessons can help your business, but you must first ask questions.
- How do you get started with personalizing a marketing campaign for your customers?
- How do you produce content that is both shareable and timely?
- How can you increase market fluidity?
Understand your brand and begin asking questions to create a campaign. These are all questions that any marketing team would benefit from knowing the answers to. Spotify has provided solutions to all three of these questions, and they have reaped the benefits. It’s now your turn.
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