Spotify is the current market leader in the music streaming market (Iqbal, 2020). It has accomplished this by beating out their competitors in music discovery, user customization, growing as a major podcast platform, and ease of interface navigation (Bizzaco, 2020). Spotify is continuing this momentum by further developing their social features. Spotify is preparing a new service: Spotify Social.

Spotify Social is an internal social network platform that allows users to interact within the Spotify app.The goal of this new service is to increase premium users by 5%, increase overall active users (premium and free) by 50 million, and increase market share by 2%.

Spotify Social will achieve these advances by offering music listeners a service that it’s largest competitor, Apple Music (Bizzaco, 2020), does not offer. It will give them a tangible reason to join Spotify by marketing special programs to users each week and by targeting growing artists to choose Spotify as their primary streaming platform.

The implementation of Spotify Social will take place in 3 steps: preliminary marketing, to spark interest and build anticipation; promotion, through discount codes and social media advertising; and activity reminders and incentives to keep users active. Through these steps, Spotify Social will function to bring more users to the platform and maintain their dedication and excitement about Spotify and therefore increase revenue.

SITUATIONAL ANALYSIS

MACROENVIRONMENTAL ANALYSIS (PEST)

POLITICAL

Spotify, in the past, has openly voiced their political opinions. This is something that has impacted their company and their customers. They stand up for their beliefs and encourage their customers to do the same. One example of this is the “I’m with the Banned” campaign. This campaign showcased artists from countries that were included in Trump’s travel ban. These countries included Syria, Sudan, Somalia, Libya, Yemen and Iran, all Musilum-majority countries (Maizland, 2017). This campaign highlights the day to day struggles faced by individuals living in these countries. These artists have received death threats and in some cases have been forced to move and leave their families (Maizland, 2017). Spotify’s goal was to “empower artists and fans from different cultures to come together, and to amplify the voices of people and communities that have been silenced” (Maizland, 2017, para. 4).

Spotify has officially announced that beginning in 2020 they will no longer air political ads (Luca, 2020). Spotify is not the first company to ban ads of this sort, they followed in the footsteps of Google and Twitter. Spotify refuses to aid candidates in spreading fake news on their app and in turn are eliminating them completely. Spotify believes that any political issue cannot be fully expressed in the 30 seconds given in an ad, meaning no political ad can truly be accurate. They are hoping that the removal of these ads will increase voter confidence and minimize the spread of false information.

ECONOMIC

Covid-19 is something that has negatively impacted companies around the world. This global pandemic has significantly lowered our economy and led to a dramatic decrease in income for some individuals. One-in-four adults have admitted to having difficulty paying their bills (Parker, 2020). If someone cannot find the means to pay bills, non-essentials are off the table. The $6.99 per month may prove to be too steep for someone who was laid off, or had a wage cut. Since the beginning of the pandemic, 25% of U.S. adults have lost their job due to coronavirus (Parker, 2020). In this time of uncertainty, a monthly subscription to something like Spotiy may be something that individuals have to say goodbye to.

SOCIAL

In the past, Spotify has done certain things that negatively impact the way the public sees them. In 2019, the Copyright Royalty Board made the decision to raise streaming payments to songwriters by 44% over the following five years (Houghton, 2019). Spotify challenged this decision which infuriated songwriters. The #cancelspotify began to spread around twitter while songwriters urged individuals to cancel their subscriptions and join Apple Music. A tweet from Manny Medina read “Officially canceled my Spotify subscription because of their abhorrent treatment of songwriters and added Apple Music #cancelspotify” (Houghton, 2019, para. 4). Although this hashtag wasn’t trending on Twitter, this act did blemish Spotify’s image. As a music streaming service, the opinion of songwriters means everything and to hurt this relationship is detrimental. Spotify remains one of the top streaming services in the world; however, an issue similar to this on a greater scale could be their downfall. Other than this issue, Spotify’s image to the public has remained relatively untouched. They have a positive reputation, which is one of the reasons they are the top music streaming service.

TECHNOLOGICAL

As a music streaming company, there are a number of technological factors that go into Spotify. They offer instant access to a world of music, where customers can customize their profiles (Forbes Writers, 2020). Spotify, unlike some of their competitors, offer a premium and ad-supported version of their services. The premium service provides customers with unlimited online and offline streaming, making music available to them whenever and wherever they want (Forbes Writers, 2020). Subscribers have the ability to listen on their phones, computers or connect to any speaker, whether it is in a car, game console or on a smart watch (Forbes Writers, 2020). The main difference between premium and the free version of spotify are the ads. On the ad-supported subscription you are limited to shuffling music on your phones, but when on a laptop or tablet you’re able to play any song. They are also unable to download music and listen anywhere like the Premium users are. Spotify is a company that caters to all types and ensures everyone has access to their services.

COMPANY ANALYSIS

The mission of Spotify, the world’s most popular audio streaming subscription service is to unlock the potential of human creativity (Spotify Writer, 2020). They intend to do this by giving artists around the world an opportunity to be able to live off of their art, while allowing their fans the opportunity to listen and be inspired by it (Spotify Writer, 2020). Spotify wishes to bring happiness into the lives of every customer through music and according to their statistics, they are accomplishing that. Spotify currently has 320 million users worldwide and that number continues to grow.

Spotify offers two different services, a premium service and an ad-supported service. According to the BCG Growth Share Matrix, the premium service would be the cash cow. This is where the majority of Spotify’s revenue comes from year to year. The growth rate for this specified service has been consistent over the past few years, making the market growth low. They also have 144 million subscribers to premium, making their relative market share high. The ad-supported service offered by Spotify would be considered a star according to the BCG Growth Share Matrix. Although this service doesn’t generate as much revenue as the premium subscription, it still generates a large amount of revenue. Other major competitors don’t offer a free version of their services, making the market growth high.

Spotify has multiple price strategies in place. They have four different premium plans available to their customers. The first is the Individual. It offers one account with the first three months free, then $9.99 per month after the free period (Spotify Writers, 2020). The next premium option is the Duo. This plan offers two seperate accounts, with the first month free and $12.99 per month after (Spotify Writers, 2020). Spotify also offers a Family premium package. This offers up to 6 accounts, with the first month free and $14.99 per month after (Spotify Writers, 2020). The last premium option is the student option. This premium version offers one account to any student, with the first month free and $4.99 per month after (Spotify Writers, 2020). This variety of options gives their subscribers a chance to customize their experience and get the most out of Spotify.

Spotify is currently releasing this year's “Wrapped” feature to all of their subscribers. This feature gives users a detailed summary of what they listened to this year. It shows your most listened to artist, songs and podcast. This feature also puts all your most listened to songs into a personalized playlist just for you. Personalized marketing is known to increase brand loyalty (Schnoor, 2020). This feature makes it more likely for subscribers to continue to use Spotify because it creates a bond between them (Schnoor, 2020). Subscribers look forward to this every year and as a result share their Spotify “Wrapped” on social media. This in turn is a free form of marketing for Spotify and propels more users to join Spotify.

Spotify also embraces marketing fluidity. Unlike other companies, who stick to one marketing platform, Spotify’s techniques are ever changing (Schnoor, 2020). They know their audience is younger, and they in turn focus on the popular trends. By remaining up to date they can keep the interest of their subscribers while continuing to gain more traction and grow their user base.

COMPETITOR ANALYSIS

As a music streaming company, Spotify is always in threat of a new service gaining traction and stealing their customers; however, their one major competitor is Apple Music. Apple music mostly caters to those with Apple products; however, it is still available to individuals with Androids. Apple is known to have the largest content library of all music streaming services. They have over 60 millions songs, whereas Spotify has 50 million (Maranan, 2020). Apple Music is also known to make deals with popular artists like Drake or Taylor Swift for early content releases (Maranan, 2020). This marketing strategy has hooked users for Apple Music and given them a reason to stay subscribed. Apple Music also offers the ability to search for a song by its lyrics. This is extremely convenient and is something that sets Apple Music apart from Spotify. Both music streaming services offer similar pricings, which takes that factor out of consideration. Apple Music tends to market mostly toward individuals with Apple products because of its similar UI design language, siri support, and automatic synchronization across Apple devices (Maranan, 2020). These are all simple features that Spotify doesn’t have the ability to offer and since the amount of Apple users is so significant, this affects them. As a whole, Apple Music has less total subscribers than Spotify, and both services are growing at similar rates (Appendix I - A.Spotify vs. Apple Music (Iqbal, 2020)).

One secondary competitor for Spotify is Amazon Music. Amazon Music was released in 2016 and since has built a subscriber base of 55 million (Pinkhasov, 2020). Although this is not nearly as close to Spotifys 144 million subscribers, it is still significant enough to fear. Amazon Music also offers an ad-supported tier, similar to Spotify. One thing that sets Amazon Music apart is their discount offered to Amazon Prime members. This marketing strategy is smart considering Amazon Prime's large user base. Amazon Music has the largest growth in subscription numbers, they grew 70% in one year, which is significantly higher than Spotifys 25% growth (Pinkhasov, 2020). Amazon Music is growing quickly, but Spotify is a major force to be reckoned with.

CONSUMER ANALYSIS

Consumers are what make or break any company. Spotify knows this fact and does everything in its power to form a strong relationship with their users. In this industry, the consumer base is vast and diverse. Individuals of all backgrounds and ages want to be entertained through music. It is impossible to create an experience every single individual will love, so Spotify focuses on one group of people. The vast majority of Spotify’s consumers are students. That is the main reason Spotify created a discounted premium option catered directly to them. The ages 18-24 serves as Spotify’s largest segmentation of users (Appendix I - B. Age of Users (Arias, 2016)). This student segment accounts for roughly 47% of their users in total (Appendix I - B. Age of Users (Arias, 2016)). Spotifiy’s features specifically cater to the younger demographic. The ability to create your own playlists and listen to anything at any time is a major draw for this age group. “Spotify’s notion of music listening as an experience that can be coupled with other activities, such as doing homework, working out, partying, and hanging out with friends, makes it all the more accessible to the touch-and-go, hustled lifestyle of this young demographic” (Arias, 2016, pg. 14). Spotify is the perfect app for someone constantly on the go, which most students are.

SWOT ANALYSIS

Strengths

Large user base (144 Million subscribers, 320 million users)
Uses Personalized Marketing (“Wrapped”) & emphasizes Market Fluidity
Offer Premium and Ad-Supported options
Unlimited online and offline streaming
Customizable accounts

Weaknesses

#cancelspotify, didn’t support raising songwriters pay
Doesn’t have the ability to search by lyrics
Smaller music library than some competitors
Doesn’t offer exclusive releases from artists

Opportunities

Expand into the market of older generations
Create more features (like Spotify Social)
Expand music library

Threats

Apple Music
Amazon Music

INTRODUCTION OF THE NEW SERVICE

INTRODUCING SPOTIFY SOCIAL

Have you ever been using Spotify, saw one of your friends' recent listens and wanted to interact with it? With Spotify’s newest update, you can! See Appendix II.B for what your profile could look like.

The purpose of Spotify Social is to bring Spotify into the social media realm. Spotify is actively expanding from strictly music, to podcasts, and the addition of promo videos. It makes sense for them to set up a platform for user interaction.

Not only does this new feature allow users to interact and keep up with their friends, but also their favorite artists. Spotify creates a space dedicated for music listeners of all kinds, and now it will foster a conversation around that music as well - a conversation you can have with your friends or with the artist!

NEW FEATURES

The ability to like and comment on recent listens … you can already see your friends recent streams, now show your support by reacting to what they’ve been listening to.

Appendix II.C shows the new notifications tab so you never miss an interaction with friends.

The ability to send direct messages … send your friends or favorite artists a playlist, song, podcast, etc
The ability to engage with your favorite artists … by following your favorite artists, you are able to view their feed and see any messages they post
The ability to share stories … post a short video to your feed showing you listening to your favorite songs - show off your vocal skills!

Appendix II.A shows where your Spotify Social story will appear on the share tab for music.

MARKETING OBJECTIVES

-SMART standards (specific, measureable, attainable, relevant, time-based)

Increase active users by 50 million (Spotify currently has 320 million account holders)
Increase total market share by 2% ( to roughly 38%)
Increase premium percentage by 5% (55% to 60%)

STP STRATEGIES

SEGMENTATION AND TARGETING:

Spotify’s new feature Spotify Social is mainly targeting a demographic between the ages of 18 to 29. However, audiences that are older or younger are also welcomed to use Spotify Social. Spotify’s biggest competitor is Apple Music. While Spotify’s main audiences are ages between 18 to 24, Apple Music’s main audiences are ages between 18 to 34. Adding Spotify Social would expand our market. The younger generation can show the older generation what Spotify has to offer with our new feature. Allowing us to expand our market to the older generation as well. This will give us the opportunity to compete with Apple Music. Spotify Social’s geographical segmentation targets all areas of living that have connection to the internet. Rural areas of living primarily listen to country music, urban areas of living primarily listen to rap and pop music, and suburban areas are somewhere in between. Although they differ in music genre, Spotify Social can target rural, suburban, and urban areas because of its wide variety of music options. Music enthusiasts that like to share what music they listen to with their friends and family will find it much easier to share by using Spotify Social. The direct messaging feature will terminate the action of sharing through iMessage or the hassle of taking a screenshot of the song then sending it. Additionally, Spotify Premium users will have an interest in Spotify Social because of brand loyalty. Spotify Social targets an audience of people between the ages of 18 to 29 which will positively conflict with Spotify’s student discount. Currently Spotify Premium users are 144 million, Spotify Social aims to increase that number to 194 million. Spotify Social also aims to increase the market share by 2%.

POSITIONING:

The functionality of Spotify Social allows users to access benefits of the product that standard premium users do not have. The experiment focuses on the emotional appeal of the customer. Users of Spotify Social will experience different emotions when posting their favorite songs and listening to other users’ posts and while commenting and interacting with other users about the content which would boost traffic within the app.

4P STRATEGIES

PRODUCT STRATEGY:

Users of Spotify Social will have the ability to share their favorite songs and artists with their family and friends. Furthermore, users will be able to like and comment on artists' songs, direct messages to other users, follow artists’ updates and share stories of what music they are currently listening to. Thus, adding the best components of social media to your music experience. The first feature that will be implemented into Spotify Social is the ability to like and comment on recent listens. Spotify already has a like feature, however, now the amount of likes the song has will be available for Spotify Social users to see. The ability to comment on songs will allow users to share their opinions on their favorite tunes. Artists will be able to choose whether or not the public views these comments. The second feature is the ability to send direct messages. Like the app Instagram, Spotify Social users will be able to follow their friends’ accounts and send them private messages. Users can also send their friends their favorite songs, artists, playlists, and podcasts. The third feature of Spotify Social is the ability to engage with your favorite artists. There will be the option to send direct messages to an artist, if they choose to turn on. This option will mostly attract artists that have a smaller following because it gives them the opportunity to engage and build a fan base. Additionally, Social users will be able to view the feeds of artists they follow. An artist's feed can consist of a message, a picture, or a video; such as them recording in a studio. However, users will only be able to like what the artist posts on their feed. Users will not be able to comment on the artist's feed because we want Spotify Social to still be about the music instead of turning into an app that's really similar to Instagram or Twitter. The fourth feature is the ability to share stories. This feature will allow Social users to post a short video of what they’re listening to. What differentiates this feature from Instagram or Snapchat’s story feature is that the video won’t be able to start recording until the user picks a song from their Spotify library. When the song is chosen, the user will be able to record for up to 15 seconds. Additionally, the user will be able to change the volume of the song audio anywhere from 50% to 100%. This option will allow the user to sing with the audio or give their reaction to the song. Users that choose 100% song audio will most likely give facial reactions or dance in the video.

4P STRATEGIES

PRICING STRATEGY:

The subscription to Spotify Social for regular users is $6.99 per month. Spotify is offering a special discount to all students. A Monthly subscription fee to Spotify Social for students would be $5.99 per month.

Spotify will also offer three different promo codes. “Share Your Sound” is the promo code that will be offered to current subscribers. With this promo code, current subscribers will be able to experience the new features of Spotify Social for free for their first four months. “Start Sharing Your Sound” is the promo code that will be offered to new subscribers where they will get a three month free trial. “Student Share Your Sound” is the promo that will be offered to student subscribers, who will get to enjoy a six month free trial.

4P STRATEGIES

DISTRIBUTION STRATEGY:

Alongside the Home, Search, and Library icon at the bottom of the screen, Social is a new icon that would be added to Spotify. Once the icon is pressed or clicked, users will be brought to a screen that explains what Spotify Social is. This explanation will include Spotify Social’s features, their benefits, and the payment plans. All Spotify users (Premium or without) will have access to this icon. Users may purchase Spotify Social without paying for Spotify Premium, or they may have both Premium and Social. When Social is released, there will be a pop up ad for Spotify Social everytime a user opens Spotify (when the app restarts, not when a user goes back into Spotify to resume what they were doing). Users will be able to close the ad right away to alleviate customer annoyance. This advertisement will last one month starting after the release of Spotify Social.

4P STRATEGIES

PROMOTION STRATEGY:

Users that already have Spotify Premium will receive a promotional email about Spotify Social.
Promo Codes.

Users who are currently using Spotify Premium will receive a promotional email about Spotify Social. Additionally, there will be promotions on all of Spotify’s social links such as Facebook, Twitter and Instagram. These promotions will advertise price discount incentives.

Tunesday.

The purpose of Tunesday is to give users a reason to use the new platform. By inviting them to participate in something specific, it will encourage them to try Spotify Social. (See Appendix IV. A for advertisement)

Spotify will automatically send Spotify Social users a banner notification (Appendix IV.B) each Tuesday reminding them of Tunesday. Notifications will say “IT'S TUNESDAY! Share your sound today! Tell your friends what you’re listening to on Spotify Social”.

Spotify Up n’ Comer

The goal of the “Up n’ Comer'' program is to give users a reason to interact with Spotify Social. This service gives back to active users by using the official Spotify Up n’ Comers playlist feature as an incentive. (See Appendix IV.C for playlist visual)

Additionally, this program seeks to make Spotify the top platform for budding artists. Through the Spotify verification, an artist can be labeled as an ‘ official Spotify Up n’ Comer’. This will boost their credibility and encourage them to be active and spark interaction as each week's top verified Up n’ Comer artists will be featured on Spotify's Up n’ Comer playlist. (See Appendix VI.D for verification visual)

4P STRATEGIES

GLOBAL STRATEGY:

Spotify is currently available in 92 countries, meaning once Spotify Social is released, it will be available in all of these countries. However, as of 2019, Europe accounted for more Spotify users than any other region in the world having 35% of the world's active users (95 million monthly active users). North America had 27%, Latin America had 22%, and the rest of the world had 16% as of 2019 (Watson, 2020). This means that Spotify Social will mostly be advertised and targeted for Europe, North America, and Latin America because that is where the greatest audience is. Google ads, Youtube ads, and TV commercials of Spotify Social will be primarily broadcasted in Europe, North America, and Latin America.

TIMELINE AND BUDGETING

Market Research - 2 months - $50M

Market research is perhaps the most important part of the process of creating Spotify Social. Our target market are young adults between 18-29 years old. However, Spotify is a global app - meaning there are hundreds and hundreds of different cultures regardless of the age group.

Design & Development - 3 months - $300M

Once market research is concluded, the information obtained will be used during the design and development phase. Creating an app design that appeals to a highly contrasting demographic, while presenting a new and fresh social media platform, and also staying true to Spotify’s layouts will be difficult, and will require a large investment. Near the end of this period, we will also begin teasing small amounts of social media ads on other platforms, such as Instagram and Twitter.

Social Media Ads - 4 Months - $10M

As mentioned above, we will begin social media ads near the end of the Design and Development phase. This will build anticipation before Spotify Social is launched, leading to high initial consumption upon its release.

Product Launch - 1 March 2021 - $100

After roughly a month of teasing social media ads, we will launch Spotify Social at the beginning of March 2021. The Apple app store only costs $100 to release a new app.

Social Media Influencer Campaign - 4 months - $8M

Once Spotify Social is actually available for use, we will attack initial consumer excitement with our social media influencer campaign. This will involve promotional posts from high profile, young celebrities with high volume of followers. High profile celebrities, such as Selena Gomez and Kim Kardashian, charge roughly between $400,000 and $500,000 per post. This campaign, coupled with the “Up N’ Comer” program will create strong growth of both consumers and artists using spotify.

TV Ads & General Branding/Sponsorships - 6 months - $20M

As initial growth begins to plateau, we will begin launching TV Ads, as well as general branding and sponsorships. This will help maintain public interest, while holding a sustainable and respectable growth rate.

GANTT CHART

APPENDIX I - SITUATIONAL ANALYSIS

A. Spotify vs. Apple Music (Iqbal, 2020)

APPENDIX II - NEW FEATURES

Spotify Social on the share tab.

Your Spotify Social account

Spotify Social notifications tab

APPENDIX III - QUESTIONNAIRE

Forms response chart. Question title: Do you use Spotify?. Number of responses: 95 responses.

APPENDIX IV - PROMOTIONS

Tunesday advert

Tunesday banner notification reminder

Up n’ Comers official Spotify playlist

Up n’ Comers advert

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