Spotify: The race to exist in the future of music streaming

With Taylor Swift shake shake shaking off Spotify, we took the opportunity to have a look at the music giant’s playlist of consumer perceptions, potential threats and advances in commercialization.

Music-streaming service Spotify is one of the most sought-after music properties of the moment. Boasting 10 million subscribers in May 2014 and 40 million monthly active users, platforms such as this must always look to the future as competitors and alternative services emerge on the market.

With Apple’s acquisition of Beats Music and Google’s ownership of YouTube, Spotify will constantly be reassessing its USPs against its competitors, most notably amid speculation that it may go public in the coming months.

MEC’s MediaZ consumer perception tool allows us to compare characteristics against a wide range of properties including digital, sporting and TV, and to assess the suitability of partnerships, advertising placement choice as well as unique collaborations.

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Characteristics have remained virtually unchanged

It is noteworthy that since 2009, when Spotify first featured in MediaZ, and in all four waves of research since, the perceptions of its characteristics have remained virtually unchanged. Its highest-ranking qualities include Creative and Fun, which both achieved percentages of 53% in the most recent assessment. This consistency demonstrates Spotify’s clear brand positioning over the past few years with consumers clearly understanding the brand and its proposition.

A ‘Tidal’ wave of competition?

As well as the ubiquitous aforementioned competitors, a new service is on the horizon with a threatening quality.

Tidal streams music files which offer a significantly greater bitrate than most other music services, meaning the quality of the sound is far superior. When it launches in both the US and the UK in the next month, it will be host to over 25 million songs available for streaming, as well as offline listening. Subscribers will also have access to 75,000 HD music videos and exclusive editorial. Arguably, what Spotify comparatively lacks in quality, it makes up for in value for money, as the Tidal subscription costs double that of Spotify, at £19.99 per month.

This emphasis on premium quality is arguably a threat to Spotify’s characteristic of High quality, currently one of its strongest at 43% and its Different characteristic at 35% .

Growing commercial savvy

Perceptions aside, Spotify is raising its commercial game, as its latest advancement consists of plans to roll out video ads in late 2014. This will allow free Spotify users to watch a video ad in exchange for 30 minutes of ad-free streaming. These ads will be tested in Q4 with brands including McDonald’s, Coca-Cola, Ford and Universal Pictures.

In February 2014, Spotify also entered into a partnership with News UK, through which new annual subscribers to The Times and Sunday Times’ Digital and Ultimate Packs received a year’s free Spotify Premium subscription.

Interestingly, MediaZ data shows that 28% of respondents didn’t know much about Spotify or have never heard of it – a significant volume of people compared to the average digital property score of 16%, so, despite huge numbers of monthly users, there is still room to increase brand awareness and capitalise on consumers’ love of digital.

Evidently, the music streaming market is evolving, with new competitors and changing commercial structures. Only time will tell if Spotify remains the leader of the pack.

This article was put together by Anna Breslauer, Insight Executive – Social & Research @ MEC London #MECThinks

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