Spotify Brand Audit IMC 613

Jamie Huggins IMC 613 — Week 9 �1

Spotify Brand Audit

Jamie Huggins

IMC 613

Source: 9to5google.com


Table of Contents

Executive Summary………………………………………….………………………..……………………..………………….3

Industry Background……………………………………………………………………..…………………………..…………4

Brand Position…………………….……………..……………………………………………………….………..……5

Points-of-Parity………………………………………………………………………………..………….……………..6

Points-of-Difference………………………………………………………………………..…………….……………..7

Target Audience……………………………………………..….………………………………………….……………8

Allocation of Branding Resources………………………..…………………………………..…………………….…8

Benefits Gained……………………………………………………………..………..………..…………………….…9

Competition……………………………………………………………………..………………….……………………9

Brand Inventory……………………………………………………………….…………………………….……………….….12

Service Offerings………………………………..………………….…………………………………………………12

Brand Elements………………………………………………………..…………………….…………..……………13

Brand Associations…………………………………………………………..………………………………………..14

Company Perceptions………………………………………………………………………..……………………….16

Marketing Support Programs………………………………………………………..……….…..……………….…19

Competitive Environment……………………………………………………………………………………………..20

Brand Hierarchy………………………………………………………………………………..………….…………..22

Brand Exploratory……………………………………………………………………………………….………………..…….24

Service Offerings (Consumer Perspective……………….……………………………….…..…………………….24

Brand Associations (Consumer Perspective)……………………………………………….…..………………….25

Company Perceptions (Consumer Perspective)…………………………………………..………………………27

Marketing Support Programs (Consumer Perspective)……………………………………………..…………….29

Competitive Environment (Consumer Perspective)…………………………………………………..……………30

Target Market…………………………………………………………………………………………………………..31

Perceptual Map……………………………………………………………………………………….………………..32

Classmate Survey……………………………………………………………………………………………………..33

Recommendations……………………………………………………………………………………………………………..36

References……………………………………………………………………………………………………………………….39


Executive Summary

This brand audit is a health check for Spotify and seeks to identify and address any

problems the brand may be facing with the purpose of improving brand equity and the bottom

line. Within this brand audit is an industry background, a complete brand inventory and brand

exploratory, and a recommendations section for future improvements to the Spotify brand itself.

The brand inventory section provides an assessment of the health of the Spotify brand

and its sources of brand equity from the company’s perspective. The brand exploratory

recognizes what Spotify consumers perceive about the brand in order to better understand it

and address any possible weaknesses it may have.

With over 75 million active users in 64 different countries, it seems safe to say that

Spotify is certainly doing something right. The brand continuously strives to be innovative and

increase its services to better appeal to its target audience. However, because Spotify is a

challenger brand in the digital streaming music industry, it will have to make strong efforts to

truly connect with its user base and turn “Spotify” into a household name in the United States.

The two main issues surrounding Spotify that were discovered in this brand audit include

the following: a lack of brand awareness among Spotify’s target market of Millennials and a lack

of market share in the digital music streaming industry. Recommendations to maintain growth

and success include improving market share by growing both free and premium user bases and

improving brand awareness by creating multi-platform advertising campaigns.

These challenges and recommendations present an opportunity for Spotify to continue

grow as other competitors launch their own services and products. If Spotify can grow its

market share and increase its brand awareness among Millennials, it will greatly improve the

brand’s chances of remaining one of the top music streaming services and one day, perhaps,

being the top music streaming service in the industry.


Industry Background

While the music industry had experienced decline in past years, especially in the area of

album sales, the industry as a whole is not down. In actuality, the industry has recently

experienced a boost in growth, which has counterbalanced declining album sales. This growth

is the result of streaming services, like Spotify. "Streaming is beginning to fill gaps in digital

revenue that options like music downloads used to occupy. In 2014, digital downloads from

iTunes and other sources fell 8%, and the IFPI believes that the rise of smartphones and a

need-it-now attitude among listeners is largely what’s driving the push toward quality streaming

services” (Snader, 2015).

“The number of stream equivalent albums, on services such as Spotify, has increased

year-on-year by almost 80 per cent” (Willgress, 2015). This data compared 6 months of time

between January and June of 2014. While album sales

were down almost 4% during this timeframe, total music

consumption increased 4% (from 52 million digital

listeners to 55 million listeners). "The most-streamed

track of the year to date is Mark Ronson’s Uptown Funk,

which has been streamed 45 million times so

far” (Willgress, 2015). Streaming was also boosted by

the release of Sam Smith’s new album, “In the Lonely

House,” and Ed Sheeran’s album, “X.” “YouTube figures are not included in the data, but views

are up 98.2% at 12.5 billion in comparison with the 6 month equivalent period last

year” (Willgress, 2015).

According to Kevin Brown, who is in label relations for Spotify in Europe, “'It should come

as no surprise to learn that more people than ever before are enjoying, discovering and sharing

music through streaming services. Listening to music on Spotify is simple, easy and free, and

Source: dailymail.co.uk


helps music fans to discover a whole new world of music wherever and whenever they want

it” (Willgress, 2015).

Subscription streaming services are also on the rise growth-wise. "Revenues for

subscription services increased 39% in 2014 to $1.57 billion, including Spotify’s ad-free

premium service for about $10 per month and the new

streaming service Tidal (under music mogul Jay-Z’s

wing). Today, an estimated 41 million people pay for a

streaming service of some kind, up from 28 million

people in 2013” (Snader, 2015). However, it is important

to note that a majority of consumers will still seek out the

most affordable streaming services possible. For instance, Spotify has 75 million active users,

but only 15 million of those pay for its subscription services (Snader, 2015).

Brand Position

Launched in 2008, Spotify was created in Sweden, but expanded to the United States

later in mid-2011. Since then, Spotify has grown to be one of the most popular music streaming

services in the world. “As of June 2015,

the music streaming platform had 75

million active users worldwide, up from

50 million in November of the previous

year” (Number of Global, 2015). Spotify

is particularly popular with Facebook

users (used by 39 million active

Facebook users) and smartphone users (used by 15% of smartphone users).

Source: dailymail.co.uk

Source: statista.com


However, even with solid statistics, Spotify still ranks behind the top music streaming

competitors. According to the 2015 Infinite Dial report from Edison Research and Triton Digital,

Pandora leads the audio streaming

space with 34% of users polled stating

that they had used Pandora in the

last month. Furthermore, Pandora has

the highest brand awareness at 75%

(Peoples, 2015). iHeartRadio and

iTunes radio are other top contenders, with 11% users stating they had used the services in the

last month. However, iTunes ranks higher in brand awareness (72%), while iHeartRadio ranks

slightly lower in brand awareness (59%). Finally, comes Spotify with 10% of users stating they

had used their streaming services in the last month. Additionally, the brand only has a 41%

brand awareness ranking. "All streaming services are most popular with the youngest age

group: 54% listened to Pandora in the last month, 23% listened to Spotify and 20% listened to

iTunes Radio” (Peoples, 2015).

Points-of-Parity (POP)

• Music Streaming Services: As previously stated, Pandora is the #1 music streaming

service — with 34% of users stating that they used the platform in the last month. Spotify

comes in 3rd, with 10% of users stating that they used the platform in the last month (Peoples,

2015).

• Free and Paid Services: Both Spotify and Pandora offer free subscriptions to users (with

ads) and paid (ad-free) subscription based services to users. Pandora’s service is $4.99 per

month, while Spotify’s is $9.99 per month.

Source: tritondigital.com


• Apps: Both Pandora and Spotify offer desktop, mobile and web apps to their users. However,

it is important to note that only Pandora One users (Pandora paid members) can access the

desktop app.

• Radio: As mentioned previously, Pandora is a radio streaming service. It is important to add

that Spotify also offers radio, but it is traditional style radio and not music recommendation

radio like Pandora offers.

• Social Features: Pandora and Spotify both afford their users the ability to connect with

friends, share their favorite music, or recommend artists and playlists. Pandora users have

the ability to share stations across Facebook and Twitter, while Spotify users

"have the ability to share individual songs, entire playlists, and even specific artists with any of

their friends/followers on Facebook, Twitter, or Tumblr” (Stella, 2015).

Points-of-Difference (POD)

• Library Size: While both streaming services have a library of music at their users’ dispense,

the size of the library differs greatly. Pandora has a music library size of about 1,000,000

songs. Spotify has approximately 30 million (Spotify vs Pandora, 2014).

• Song Choice Freedom: Pandora is a radio streaming service that does not allow users to

choose specific songs they want to listen to. Instead, they create radio stations based on their

music preferences. Spotify listeners, on the other hand, can choose what songs they want to

listen to and when they want to play them (Spotify vs Pandora, 2014).

• Custom Playlist Creation: Spotify allows its users to create custom playlists that can be

shared on the platform and across social media. Other users can even edit these playlists if

the creator allows. Pandora does not allow its users to create custom playlists. Users are

only able to build their own playlists, which are really just radio stations, based on their favorite

music (Spotify vs Pandora, 2014).


• Type of Streaming: As previously stated, Pandora is a radio streaming service. Users visit

the site to create radio stations based on their favorite artists or music genres. Pandora is

more about music discovery. Spotify focuses more on customizable, streamable music. It is

more about listening to and sharing music that users already know and love.

• User Demographics: "Nearly two-thirds of US Spotify users were between the ages of 13

and 29, with 18- to 24-year-olds accounting for the largest share. In comparison, 45% of

Pandora listeners were between 13 and 29, and 35- to 44-year-olds accounted for the largest

share of users” (Pandora Maintains, 2015).

Target Audience

According to ComScore and Spotify representatives, “40% of all Spotify users in the

United States are between the ages of 18

and 24. Compared to the general

population, Spotify users are 26% more

likely to be a student, 20% more likely to

be a college student, and 3.75x more

likely to be a graduate

student” (Biernacki, 2013). The average Spotify user streams music for 107 minutes per day.

Allocation of Branding Resources

The digital music streaming industry is a growing market with challengers Pandora

launching in 2005 and Spotify launching in 2008. The mission of Spotify was simple. The

company sought to give people access to all of the music that they wanted in a completely legal

and accessible way (Spotify, 2011). Pandora’s mission was also similar; they sought to allow

their users to play only music that they loved (Pandora, 2015). Pandora accomplishes their

mission through their use of random, radio song discovery, while Spotify allows users to search

Source: engadget.com


and listen whatever specific songs and albums that they want. However, Spotify still severely

lags behind Pandora in the areas of brand awareness and user listening base. If Spotify hopes

to continue to grow and challenge Pandora in coming years, the brand must boost overall

awareness among its target audience and respond to their streaming wants and needs in order

to stay relevant.

Benefits Gained

Building brand awareness will allow Spotify to increase its market share and strengthen

any confused perceptions users may have about the brand. In turn, this will help grow and

strengthen Spotify’s existing user base. Spotify can use non-traditional advertising efforts to

help the brand increase listening loyalty and numbers by focusing on Spotify’s value (for both its

premium and free services) compared to competitor, Pandora. The expectation is to see

Spotify increase its market share to 14% and its overall brand awareness to 60% through these

branding and marketing activities. These proposed numbers will put the brand in a much better

position to contend with Pandora.

Competition

Spotify was chosen as the challenger brand because of its

immense potential and consecutive growth rate over the past few

years. In just 6 years, Spotify has evolved into a global

powerhouse “with more than 20 million paying subscribers and 75

million active users. That’s double the number of paying users

Spotify had in May 2014 when it hit the 10 million subscriber

mark” (Paul, 2015). Additionally, Spotify is working on branching

out its services beyond music to include podcast and radio. “The

world's largest media organizations have signed on with Spotify

Source: macworld.com


to contribute content, including ABC, BBC, NBC, TED, and Comedy Central” (McGarry, 2015).

Spotify is working with these partners to develop original content for users to watch and listen

to. “Some of the more interesting ventures include Amy Poehler's Smart Girls, which will create

a Dance Move of the Day video for the platform, and a show called Turntable, which features

musicians and chefs performing and eating together” (McGarry, 2015). Finally, Spotify has

shown ingenuity by recently adding a feature just for runners. Songs are matched to the

runner’s tempo and pace to create an engaging experience. These innovative efforts, coupled

with consistent growth, show that Spotify has the potential to compete with industry leaders, like

Pandora.

Pandora

Pandora is the current digital music streaming industry leader with a 34% market share.

Founded in 2005, the company has grown to “more than 200 million registered users in the

United States, Australia and New Zealand. This marked a huge increase from 22 million

registered users back in 2009. Of

those registered users, it was

estimated that in 2013, the company’s

number of paying subscribers reached

3.3 million, which suggests that the

majority of subscribers in 2013 still

preferred Pandora’s free streaming

service” (Statistics and Facts, 2015). However, it is important to note that Pandora’s leading

streaming status has come at a cost. In 2013, the company’s share of content acquisition costs

was considerable at 53.8% of their total revenue. “Yet the future holds some potential good

news as this share is expected to gradually decrease to 35.3% by 2021 (Statistics and Facts,

2015).

Source: statista.com


iHeartRadio

iHeartRadio is another top contender in the

digital streaming music industry. Launched in 2011,

the company has 11% of the market share and over

60 million registered users. “iHeartRadio’s app has

been downloaded 500 million times already but

without an active user number, it’s difficult to quantify

just how it stacks up to the competition. Unlike some of the other players in the space,

iHeartRadio doesn’t offer a paid service. Instead, it earns all of its money from ad

revenue” (Knight, 2015). Earlier this year, the company claimed that it is the fastest growing

digital streaming service, and it is even growing faster than Facebook. However, these claims

were not backed with publicly shared statistics.

iTunes Radio

The third competitor in the digital streaming music industry is iTunes Radio with a 11%

market share. Launched in 2013, the service has approximately 40 million users in the United

States and Australia (Kahn, 2014). “iTunes Radio was Apple's attempt to keep music lovers

inside the Apple ecosystem. If consumers were busy streaming music via sites like Pandora,

Apple figured it might as well offer its own streaming service in an attempt to funnel users

towards the ever-tantalizing ‘buy’ button” (Heisler, 2014). To date however, only 1-2% of users

have been clicking the “buy” button. “Overall music downloads have been declining upwards of

15%, according to several label executives. At the same time, Apple is finding that its influence

over labels is slipping as other streaming services gather momentum. One independent label

said that iTunes's share of the label's revenue has eroded from more than 70% in 2012 to about

50% today” (Heisler, 2015). At this time, Apple has no plans to turn the service into a

subscription-based platform.

Source: mashable.com


Spotify Brand Inventory

Service Offerings

Spotify offers its users both free and

premium service packages. The free service

allows any user to stream Spotify at no

personal cost. The premium service, on the

other hand, is $9.99 per month. It includes

additional features not offered on the free

service like ad free, unlimited skips, the ability to listen offline, the ability to play any track, and

high quality audio (Go Premium, 2015).

Additionally, Spotify recently announced that it will be adding even more features for

Spotify Premium users later this year. “Spotify is expanding well beyond streaming music,

adding TV shows and original video content, podcasts and radio shows, new discovery tools,

and an electronic jogging buddy to its mobile app” (Moynihan, 2015). These service

advancements allow Spotify to grow even closer to its goal of being one-stop entertainment OS

for their users’ smartphones, and they are the first step in making music-only or video-only

streaming services look limited in comparison. “According to Spotify, the new features will show

up in the iOS app first. Spotify did not specify when the new features would be available on

Android, but the company did say the video and podcast features are planned for their other app

platforms” (Moynihan, 2015).

Brand Elements

Name

Even though Spotify was originally started in Sweden, the name “Spotify” itself is not of

Swedish origin. It does not actually mean anything in Swedish (although Google Translate does

Source: spotify.com


attribute the word as being Swedish). “Instead, the company’s founders Daniel Ek and Martin

Lorentzon were sitting around one day trying to think of a name when one of the suggestions

was misheard as ‘Spotify’, which then sort of just stuck. When the duo realized there were no

Google results for the word and that the domains were available to register, they snapped them

up and the rest is history” (Woods, 2014).

Logo

Spotify has surprisingly undergone multiple logo changes in the past few years. One of

the earliest changes took place in early 2013 when Spotify debuted a redesigned logo with less

“bounce” to hopes to reach a wider audience and expand its services. The subscription

streaming service's former logo used playful, bubbly font, but the 2013 design seemed to show

a company that was taking itself a bit more seriously. The 2013 version was neater, used clean

lettering, and included a discrete icon” (Kastrenakes, 2013). Though this logo was less lively

than its predecessor, it did not mean that Spotify was settling down.

Earlier this year, Spotify redesigned its logo once again. Though this change was only a

slight color change, the brand originally received user backlash on its color choice.

Spotify responded to users by saying that their old “broccoli-green” logo was in need of an

upgrade, so that is why the color was changed. They stated, “As much as we got used to the

old broccoli green, we felt that the dreary brand palette was desperate for an upgrade. It was

time to give it a little refresh and make sure it goes well with our vibrant new color palette. The

Source: vulture.com

Source: theverge.com


new green has a little more pop and just feels right at home in our new color palette, which has

has grown to nearly three dozen colors. It not only looks more fresh and modern but also feels

feels more easy on the eye, especially when applying it fullscreen” (Shontell, 2015).

URL

https://www.spotify.com/

The brand has its original website (link shared above) currently available for 64 different

countries ranging from the United States to Uruguay to Chile.

Slogan

“The Right Music for Every Moment.”

Brand Associations

Memorability

“A necessary condition for building brand equity is achieving a high level of brand

awareness” (Keller, 2013, p.115). Spotify is one of the most popular digital music streaming

services in the world. It is available in 64 different countries and has 75 million active users.

This makes the brand inherently recognizable and memorable, which aids in overall popularity

and future growth. Spotify has successfully positioned itself in the brand marketplace, so that it

can be easily recalled by customers.

Meaningfulness

Spotify is well-known for its use of the color green. From a brand meaning perspective,

green is the color of balance, harmony, and growth. “It renews and restores depleted energy. It

is the sanctuary away from the stresses of modern living, restoring people back to a sense of

well being” (The Color Green, 2015). Spotify states that “Spotify Green” is the brand’s “hero”

color. It clearly signifies the presence of Spotify in people’s lives and helps users immediately

identify the brand (Brand Identity Guidelines, 2013).

Likability

https://www.spotify.com/


To make sure Spotify’s brand identity delivers the right music for every moment, the

brand follows three important principles: easy, personal, and fun. These foundational

principles help build a likable and engaging user experience around the brand.

Transferability

Because Spotify is a global brand, its brand elements must be able to transfer through

different cultures. Spotify is quickly becoming a widely recognized brand, and its symbol and

logo are easily transferable within its different service categories across geographic regions and

cultures. However, Spotify’s slogan, “The Right Music for Every Moment,” is less transferable,

due to the brands’ recent announcement for additional services like TV, podcasts, video content,

and radio shows. The current slogan severely limits the brand to only music and may cause

confusion (if Spotify truly becomes more than music) as it enters into new markets.

Adaptability

As previously mentioned, Spotify has adapted its logo over the years to aid in consumer

usage and popularity. To remain contemporary and relevant to its target market, Spotify has

embraced change in different logo forms. Below are some images of the evolution of the

Spotify logo as it has changed over time (the 1st logo is the original, the 2nd change took place

in 2013, and the 3rd change took place in 2015):

Protectability

Spotify’s brand is legally protected from any unauthorized use. It’s logo and brand name

cannot be used by another company, nor can another company copy Spotify’s brand name or

logo. According to Spotify’s website, “all Spotify trademarks, service marks, trade names, logos,

Source: scottbriscoe.com Source: newslangmedia.com Source: vulture.com


domain names, and any other features of the Spotify brand (‘Spotify Brand Features’) are the

sole property of Spotify or its licensors. The Agreements do not grant users any rights to use

any Spotify Brand Features whether for commercial or non-commercial use” (Terms and

Conditions of Use, 2015).

Company Perceptions

Brand Imagery

Spotify claims that imagery is one of the brand’s most important assets. Spotify focuses

on imagery that is candid and real, macro and micro, has place and personality, and

contains the presence of music.

• Candid and real: Spotify seeks to capture and promote

images that are real and authentic. They love candid

shots of real people, interacting with each other and the

world (Brand Identity Guidelines, 2013).

• Macro and micro: “Everything is relative. The simplest

moments can often mean the most” (Brand Identity

Guidelines, 2013). This is why Spotify’s imagery style

covers a wide spectrum. “From scrambling eggs for

breakfast to choosing the next leader of the free world,

all moments can be made better with music” (Brand

Identity Guidelines, 2013).

• Place and Personality: Spotify’s taste in music is as

individual and original as the brand itself. Because of

this, Spotify’s image style portrays a wide range of

people and personalities enjoying music enjoying

Source: issuu.com

Source: issuu.com

Source: issuu.com


music in a variety of recognizable places (Brand Identity Guidelines 2013).

• Presence of Music: “The strongest moments for

Spotify are those associated with music. That is why it

is important for the brand to show how their users are

enjoying music — to make a connection” (Brand

Identity Guidelines, 2013).

Brand Performance

Spotify has been extremely happy with the brand’s performance to date. Jonathan

Forster, who runs Spotify’s European operations, recently stated that Spotify intends to keep its

position as a top music player, and “it is enough to be among the top three” in a larger market.

This statement was made on the heels of “a $526 million funding round that values the Swedish

company at $8.53 billion and revealed that it now has 75 million active users, of whom 20 million

are paying customers – up from 40 million and 10 million just over a year ago” (Davidson,

2015). While the company still lags in market share (10%) behind Pandora (34%), iHeartRadio

(11%), and iTunes Radio (11%), Forster still thinks there is plenty of room for the brand to grow.

Brand Personality

As previously stated, Spotify seeks to portray its brand personality as easy, personal,

and fun.

• Easy: “Spotify is effortless and intuitive” (Brand Identity Guidelines, 2013). Easy is effortlessly

being able to join the brand, talk to the brand, and use the service.

• Personal: “Spotify is friendly, informal, and relevant” (Brand Identity Guidelines, 2013).

Personal is illustrated through the right music at the right time on users’ terms.

• Fun: “Spotify is playful, with a hint of irreverence” (Brand Identity Guidelines, 2013). Fun is

illustrated through music itself.

Feelings

Source: issuu.com


“Brand feelings are customers’ emotional responses and reactions to the brand” (Keller,

2013, p.90). Spotify portrays itself as an easy, personal, and fun brand in order to deeply

connect with its target audience worldwide. “The goal of their brand identity is to create a look

and personality that signals to the brand’s core audience of Millennials that Spotify is as rich and

lively as the music culture it fronted, rather than simply a technology service that served up

songs” (Tischler, 2015).

Judgements

“Brand judgements are customers’ personal opinions about and evaluations of the

brand, which consumers form by putting together all different brand performance and imagery

associations” (Keller, 2013, p. 89). Spotify distinguishes itself from competitors “by offering

unique benefits that other companies don’t offer, such as the ability to access specific artists

through a flat subscription fee” (Ganot, 2015). Furthermore, Spotify seeks to differentiate itself

by making its brand more than music and offering video, podcast, radio, etc. They believe that

an innovative mindset can ultimately affect consumers’ attitudes about their brand.

Marketing Support Programs

“Spotify’s growth has been a more modest approach relying on word-of-mouth, PR and

co-marketing rather than big ad budgets. When the service went live in October 2008, it kept its

free service invitation only, something that had

been in place whilst it was in the final stages of

development prior to public launch. By

introducing scarcity, the invitation-only element

was a vital part of the platform’s rise. It helped

create a viral element to the service, with users each having 5 invites at first to share with their

friends. Similarly, the launch of Spotify in the US used private ‘Beta’ invites to create a buzz as

Source: news.spotify.com


those with access shared their use of it in social media (and through word-of-mouth)” (Chaffey,

2015).

Today, Spotify additionally relies on a mix of social media, co-marketing and

partnerships, and campaigns to improve its reach and visibility. “Spotify adopts a traditional

approach to managing its own social media feeds” (Playing the Social Tune, 2013). Spotify

states that both Facebook and Twitter provide

them with platforms to promote their new

artists and albums, talk about new Spotify

features, and get valuable feedback to

improve their services. “In addition, Spotify

tries to drive social media users to its premium service by promoting on Facebook and Twitter

before releases unique content and competitions that only premium Spotify users can

access” (Playing the Social Tune, 2013). Spotify’s Facebook page currently has over 7,800,000

“likes”, and their Twitter profile has over 1.51 million followers. “Spotify's innovations in social

media are driven by the belief that music is social” (Playing the Social Tune, 2013).

Furthermore, Spotify has used co-marketing and partnerships to increase its reach by

embedding different widgets on other websites. “For example Drowned In Sound has a monthly

playlist which it embeds within its blog which encourages its readers to engage with Spotify. A

music magazine like NME offers apps with a range of playlists which again will generate

awareness and engagement. Other partnership services enable Festivals and Charities to

engage their audience through Spotify playlists” (Chaffey, 2015). Finally, Spotify has begun to

invest in campaigns. In 2013, the brand launched a multi-platform campaign with a 30 second

ad-spot during the premiere of NBC’s “The Voice.” Sixty-second versions of the ad also

appeared during the “Tonight Show with Jay Leno” and “Late Night With Jimmy Fallon. “In

2014, Spotify launched a 'Music takes You Back' ad. It centered around three videos which

Source: sproutsocial.com


showcases three different people’s stories through the medium of Spotify, Facebook, text

messages, Skype and Instagram. Its aim was to show how Spotify can bring people together

through its integration with social media. Spotify decided not to use TV creating 75 to 90 second

videos rather than the typical 30 second TV ad break slots” (Chaffey, 2015).

Competitive Environment

Spotify has grown to be one of the most popular music streaming services in the world.

“As of June 2015, the music streaming platform had 75 million active users worldwide” (Number

of Global, 2015). Spotify is particularly popular with Facebook users (used by 39 million active

Facebook users) and smartphone users (used by 15% of smartphone users).

However, even with solid statistics, Spotify still ranks behind the top music streaming

competitors. According to the 2015 Infinite Dial

report from Edison Research and Triton Digital,

Pandora leads the audio streaming space,

followed by iHeartRadio and iTunes Radio.

Spotify ranks 3rd, with 10% of users stating

they had used their streaming services in the last month.

Pandora


Founded in 2005, the company has grown to “more than 200 million registered users in the

United States, Australia and New Zealand. This marked a huge increase from 22 million

registered users back in 2009. Of those registered users, it was estimated that in 2013, the

company’s number of paying subscribers reached 3.3 million, which suggests that the majority

of subscribers in 2013 still preferred Pandora’s free streaming service” (Statistics and Facts,

2015). However, it is important to note that Pandora’s leading streaming status has come at a

cost. In 2013, the company’s share of content acquisition costs was considerable at 53.8% of

Source: tritondigital.com


their total revenue. “Yet the future holds some potential good news as this share is expected to

gradually decrease to 35.3% by 2021 (Statistics and Facts, 2015).

iHeartRadio

iHeartRadio is another top contender in the digital streaming music industry. Launched

in 2011, the company has 11% of the market share and over 60 million registered

users.“iHeartRadio’s app has been downloaded 500 million times already but without an active

user number, it’s difficult to quantify just how it stacks up to the competition. Unlike some of the

other players in the space, iHeartRadio doesn’t offer a paid service. Instead, it earns all of its

money from ad revenue” (Knight, 2015). Earlier this year, the company claimed that it is the

fastest growing digital streaming service, and it is even growing faster than Facebook.

iTunes Radio

The third competitor in the digital streaming music industry is iTunes Radio with a 11%

market share. Launched in 2013, the service has approximately 40 million users in the United

States and Australia (Kahn, 2014). “iTunes Radio was Apple's attempt to keep music lovers

inside the Apple ecosystem. If consumers were busy streaming music via sites like Pandora,

Apple figured it might as well offer its own streaming service in an attempt to funnel users

towards the ever-tantalizing ‘buy’ button” (Heisler, 2014). To date however, only 1-2% of users

have been clicking the “buy” button. “Overall music downloads have been declining upwards of

15%, according to several label executives” (Heisler, 2015).


Points-of-Parity (POP) and Points-of-Difference (POD)

Brand Hierarchy

Spotify currently offers one type of service to users, but the brand has three additional

service offerings coming soon. Right now, Spotify offers both free and premium music services

to its users. Free services are available to anyone, and users can stream music in a shuffle

Spotify Pandora iHeartRadio iTunes Radio

POP - #1 Music Streaming Service: 35% market share

- Free and Paid Services: $9.99/month

- Apps: Desktop, mobile, & web

- Radio

- Social Features: ability to share songs, entire playlists, & specific artists with friends/followers on social media

- #2 Music Streaming Service: 11% market share

- Free and Paid Services: $4.99/month


- Radio

- Social Features: ability to share stations on social media

- #2 Music Streaming Service (11% market share)

- Free Service (no paid option)


- Radio

- Social Features: ability to share songs on social media and view songs that friends have recently listened to or liked

- #3 Music Streaming Service (10% market share)

- Free and Paid Services: $4.99 per month


- Radio

- Social Features: ability to share stations to social media

POD - Library Size: 30 million songs

- Custom Playlists: allows users to create custom playlists

- Song Choice Freedom: Yes

- Type of Streaming: customizable, streamable music

- Library Size: 1 million songs

- Custom Playlists: allows users to create custom radio stations

- Song Choice Freedom: No

- Type of Streaming: radio/music discovery

- Library Size: 900,000 songs

- Custom Playlists: allows users to create custom radio stations



- Library Size: 27 million songs

- Custom Playlists: allows users to customize radio stations




play mode. Premium services costs $9.99 per month and include shuffle play, as well as, ad

free listening, unlimited skips, the ability to listen offline, the ability to play any track, and high

audio quality. Proposed later this year are TV, video, radio, and podcast services. “The world's

largest media organizations have signed on with Spotify to contribute content, including ABC,

BBC, NBC, TED, and Comedy Central” (McGarry, 2015). Spotify is working with these partners

to develop original content for users to watch and listen to. Finally, Spotify has shown ingenuity

by recently adding a feature just for runners. Songs are matched to the runner’s tempo and

pace to create an engaging experience.

Spotify

Services

Music TV & Video Radio & Podcasts

Running

Free Premium Coming Soon

Coming Soon

Coming Soon


Spotify Brand Exploratory

Service Offerings (Consumer Perspective)

Spotify offers its users both free and premium service packages. The free service allows

any user to stream Spotify at no personal cost. The premium service, on the other hand, is

$9.99 per month. It includes additional features not offered on the free service like ad free,

unlimited skips, the ability to listen offline, the ability to play any track, and high quality audio

(Go Premium, 2015). So, what do consumers’ think about these services?

Since Spotify is not a product, finding specific user reviews on their services is a bit

difficult. However, Spotify does have plenty of reviews on tech-blogs ranging from CNET to

TechRadar to PCMag.

• TechRadar gives the entire brand 5 out of 5 stars. Specific top highlights of Spotify’s

services include: a great new look, awesome music, excellent service features, 320 kpbs

streaming, and exclusive content. Their negatives included a clunky web player and a

poorly designed search feature (Rivington, 2015).

• CNET gives the brand an 8.9 out of 10. Positive aspects about the brand included a fresh,

clean design that goes beyond streaming music with videos, podcasts and extra features.

Additionally, it has a massive collection of community-driven playlists where users can find

great music for any mood,

activity or holiday. The free,

ad-supported version offers a

good introduction to the

service with no time limit” (Mitroff, 2012). Some negatives about the brand included difficulty

combining personal music files with Spotify’s catalogue, and the fact that without a premium

account, users cannot listen offline or pick any song they want to hear.

Source: cnet.com


• PCMag gives the Spotify brand 4.5 out of 5 stars. PCMag states that while Spotify’s offers

both free and premium services, they believe that premium price tag of $9.99 per month is

worth it. They state, “Spotify Premium lets you hear albums before they're released,

cache songs for offline playback on your computer, phone, or other devices. It also

increases audio quality to 320Kbps. Feature and quality-wise, Premium is worth the extra

bucks” (Wilson, 2015).

Brand Associations (Consumer Perspective)

Memorability

Spotify is one of the most popular digital streaming services in the world and has 75

million active users. Even with that strong user base, when compared to Pandora, iHeartRadio,

and iTunes Radio, it lacks significantly in brand awareness and brand usage ratings. Pandora

has the highest brand awareness level (75%) and monthly usage rate (45%). “iHeartRadio

ranks third in brand awareness (59%) and second in usage (17%). iTunes Radio climbed to

second in brand awareness (72%) and ranks third in brand usage (16%). Spotify brand

awareness ranks behind two laggards (41%) but ranks fourth in brand usage (13%) and has by

far the best numbers of an on-demand subscription service” (Peoples, 2015).

Meaningfulness

While Spotify is well-known for its

color green, the color itself has had mixed

responses as of late. A few months ago,

"Spotify changed the color of its logo to a

brighter forest green instead of the lime

green that it had before” (Shontell, 2015).

This was done to better attract a younger,

millennial audience and give the brand a more modern, fresh look that resonated with

Source: businessinsider.com


consumers. However, Spotify did not warn their users of the change, and because of this, many

were initially upset over the color shift. Today, it does appear that much of the initial backlash

has dissipated, and users have adjusted to the color change.

Likability

According to tech-blog reviews, which were previously mentioned, Spotify’s overall

brand likability score is high. These popular tech-blogs (ranging from CNET to PCMag to

TechRadar) have given the brand high ratings across the board, and they praise the brand on its

ease of installation and setup, integrated features and support, useable interface, and overall

performance.

Transferability

Spotify is quickly becoming a widely recognized brand, and it is currently available in 64

different countries. Spotify’s symbol and logo are easily transferable within its different service

categories across geographic regions and cultures. To date, there have not been any reports of

confusion about the brand or its elements internationally.

Adaptability

Spotify has adapted its logo over the years to aid in consumer usage and popularity. To

remain contemporary and relevant to its target market, Spotify has embraced change in different

logo forms. As previously mentioned, Spotify’s most recent logo change created a swarm of

backlash from consumers, because they did not like the new color of green the brand adopted.

However, this seems to have passed, and users are adjusting to the color change.

Protectability

Source: theverge.com


Spotify’s brand is legally protected from any unauthorized use. According to Spotify’s

website, “all Spotify trademarks, service marks, trade names, logos, domain names, and any

other features of the Spotify brand (‘Spotify Brand Features’) are the sole property of Spotify or

its licensors. The Agreements do not grant users any rights to use any Spotify Brand Features

whether for commercial or non-commercial use” (Terms and Conditions of Use, 2015). Upon

signing up to use Spotify, all users must agree to these terms and conditions of use.

Company Perceptions (Consumer Perspective)

Brand Imagery

To better reach its core user audience of

millennials, Spotify recently sought “to create a

look that would signal to the brand’s core

audience of millennials that Spotify was as rich

and lively as the music culture it fronted, rather

than simply a technology service that served up

songs” (Tischler, 2015). Spotify’s new look centered around two millennial traits: they are highly

visual and they want to be involved in co-creation. Spotify’s design agency, Collins, greatly

expanded their previous limited color palette (white, black, and green) to include duotone colors

and a series of bursting shapes. “As a millennial himself, Collins co-founder Leland

Maschmayer looks at his contemporaries as being defined by their energy and a desire to

become ‘co-creators’ – to get involved with the Spotify experience on more than just a User

Interface level” (Wilkes, 2015). While it is still too early to see how these changes affect

Spotify’s bottom line, it seems safe to say that most users agree that these imagery changes

were much needed.

Brand Performance

Source: fastcodesign.com


As previously stated, Spotify’s brand and overall performance consistently receive high

ratings across popular tech-blogs. For example, TechRadar recently stated, “Spotify is still the

undisputed king of streaming, and its reign doesn't look like ending soon with these recent

updates. The new look and the new features take what was already a brilliant service and add

the level of polish and comprehensiveness to make it a five-star product” (Rivington, 2015).

CNET similarly stated that “the competition in the on-demand streaming music category is

increasingly fierce, as the market transitions from techie early adopters to the broader mass

market that is still focused on buying digital singles and albums via iTunes and Amazon. But

while the likes of Rdio, Rhapsody and the newly minted Apple Music try to stake their claim,

Spotify's superior feature set keeps it ahead of the pack” (Mitroff, 2012).

Brand Personality

Spotify has repeatedly stated

that it wants its users to perceive the

brand as easy, personal, and fun

(Brand Identity Guidelines, 2013). In a

recent survey, MediaZ found that

Spotify’s “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” (Spotify: The Race, 2014).

Feelings

Spotify portrays itself as an easy, personal, and fun brand in order to deeply connect

with its target audience of millennials worldwide. “The goal of their brand identity is to create a

Source: mecink.com


look and personality that signals to the brand’s core audience of millennials that Spotify is as

rich and lively as the music culture it fronted, rather than simply a technology service that served

up songs” (Tischler, 2015). As seen from the graph above, Spotify users rank the brand high in

the areas of creativity and fun (53%). These positive emotional responses and perceptions from

Spotify’s users are integral in the brand’s longterm success.

Judgements

Spotify seeks to distinguish itself from competitors “by offering unique benefits that other

companies don’t offer, such as the ability to access specific artists through a flat subscription

fee” (Ganot, 2015). Furthermore, they seek to differentiate itself by making their brand more

than music by offering video, podcast, radio, etc. They believe that an innovative mindset can

ultimately affect consumers’ attitudes about their brand. While Spotify receives mostly positive

reviews and ratings, it is important to note that the brand’s overall usage rates and brand

awareness scores are still relatively low compared to Pandora, iHeartRadio, and iTunes Radio.

Spotify has recently unveiled multiple changes and expansions to their imagery and services, so

time will tell if they will help eventually bridge disconnect issues facing the brand.

Marketing Support Programs (Consumer Perspective)

Spotify relies on social media campaigns to improve its reach and visibility with its target

audience. Spotify states that both Facebook and Twitter provide them with platforms to promote

their new artists and albums, talk about new Spotify features, and get valuable feedback to

improve their services. Spotify’s Facebook page currently has over 7,800,000 “likes”, their

Twitter profile has over 1.51 million followers, and their Instagram account has over 248,000

followers. “Spotify's innovations in social media are driven by the belief that music is

social” (Playing the Social Tune, 2013). Additionally, Spotify recently raised its commercial

game, and one of its latest advancements rolled out video ads in late 2014. These

advancements allowed free Spotify users to watch a video ad in exchange for 30 minutes of ad-


free streaming. These ads were 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 enough,

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 capitalize on consumers’ love of digital” (Spotify: The Race, 2014).

Competitive Environment (Consumer Perspective)

Pandora


The company has grown to “more than 200 million registered users in the United States,

Australia and New Zealand. Of those registered users, it was estimated that in 2013, the

company’s number of paying subscribers reached 3.3 million, which suggests that the majority

of subscribers in 2013 still preferred

Pandora’s free streaming

service” (Statistics and Facts, 2015).

Additionally, Pandora has the highest

brand awareness (75%) and the highest

monthly usage (45%). Pandora’s user

base consists mostly of a younger

audience (54%) who listened to the

service in the past month. Concerning older demographics, 12% of the 55+ age group listened

to Pandora in the past month (Peoples, 2015). Finally, Pandora drives consumer loyalty better

than any other online music service. “According to a recent study by IFPI, Pandora is the

Source: fool.com


number one station in 14 of the top 15 local radio markets in the United States” (Guarente,

2014).

iHeartRadio

iHeartRadio has 11% of the market share and over 60 million registered users. To date,

iHeartRadio’s app has been downloaded at least 500 million times (Knight, 2015). “iHeartRadio

ranks third in brand awareness (59%) and second in usage (17%)” (Peoples, 2015).

Additionally, their user base mainly consists of 25-34 year olds. According to the above study

completed by IFPI, iHeartRadio actually did not place on the top 8 music streaming companies

for loyalty among users.

iTunes Radio

iTunes Radio has a 11% market share, and the service has approximately 40 million

users in the United States and Australia (Kahn, 2014). “iTunes Radio climbed to second in

brand awareness (72%) in fewer than two years and ranks third in brand usage

(16%)” (Peoples, 2015). iTunes Radio user bases consists of a mostly younger audience (20%)

who listened to iTunes Radio in the past month. Concerning other demographics, of people

aged 25 to 54, 12% listened to iTunes Radio in the past month (Peoples, 2015). Concerning

consumer loyalty, 92% of iTunes Radio users listen to Pandora. “The report, from investment

bank Canaccord Genuity, indicates that while iTunes Radio compares favorably to Pandora's

offering in fit and finish, the service lags behind in overall consumer perception thanks to poorer

automated song selection. When asked to quantify the "overall experience" of both services,

66% of respondents call their experience with iTunes Radio ‘positive’ or ‘very positive,’ while

Pandora scores 78% on the same metric. Apple wins with tight margins on app usability

questions, but loses out to Pandora in perhaps the most important metric, ‘Plays songs I want to

hear,’ 63% to 72%” (Cole, 2013).

Target Market


Millennials

“According to ComScore and Spotify

representatives, 40% of all Spotify users in

the United States are between the ages of 18

and 24. Compared to the general population,

Spotify users are 26% more likely to be a

student, 20% more likely to be a college

student, and 3.75x more likely to be a graduate student. The average Spotify listening session

averages 107 minutes per day” (Biernacki, 2013).

Perceptual Map

In reviews about Spotify, these were some of the top words and concepts associated

with the brand. Spotify seeks to position itself as easy, fun, and personal, and it appears that

many of these terms exemplify those sought-after qualities.

Source: variety.com

FUNGREAT LOOK CREATIVE

GREAT SERVICE

FEATURESSPOTIFYAWESOME MUSIC

EXCLUSIVECONTENT

FAST STREAMING FRIENDLY


Classmate Survey

During this session, 5 questions were asked to a total of 10 respondents. 6 of the

respondents were female and 4 of the respondents were male.

Q1: When streaming digital music, what are the top streaming services you use? Please list in

the order from most to least used. If you do not stream music digitally, share why.

Responses:

From these results, it is visibly seen that Pandora is the leader in most popular

streaming service — 5 of 10 respondents or 50% chose Pandora as their top streaming service.

Spotify tied for second with Sirius XM, with 2 respondents saying that it was their top music

0

1.25

2.5

3.75

5

Pandora Spotify Sirius XM iHeartRadio Amazon Prime iTunes Jango

Listed 1st Listed 2nd or later


streaming choice. For overall responses, Pandora was the leader once again — 8 respondents

out of 10 listen to Pandora. Spotify placed second with 4 respondents saying they used the

service.

Q2: What attributes are unique to Spotify that would make you use it over Pandora or

iHeartRadio?

Responses:

From these results, one of Spotify’s main issues can be seen — brand awareness. 36%

of respondents were unfamiliar with the brand’s attributes. This is reflective of previous

statistics mentioned that other users had a lack of knowledge concerning awareness about the

brand in comparison to its competitors. Those that were familiar with Spotify, ranked its top

attributes building and sharing playlists, the ability for song choice, and that it offers free

services. A small number of respondents favored the program’s layout and user-friendly

interface.

Q3: List one or two things that might keep you from using Spotify to stream music over its

competitors.

Responses:

14%

7%

7%

14%

21%

36%

Unfamiliar Playlists Song Choice User FriendlyLayout Free


From these results, it is apparent that the main fear associated with Spotify is cost.

Respondents claimed that they either feared a cost increase or a mandatory subscription fee

being forced upon users. Once again, brand awareness was an issue here — 18% of

responders stated that they were unfamiliar with the brand and had a lack of knowledge about

the Spotify brand. Other concerns raised were library reduction and Apple integration. Only

one user stated that he had no concerns about the brand.

Q4: Which of the following age groups do you fall under? (Optional)

9%

18%

9%

9%

55%

Cost Library Reduction Prefer Apple Unfamiliar Nothing

11%

22%

67%

25-34 35-45 18-24


From these results, it can be seen that the majority of the respondents (1 elected not to

answer this question), were between the ages of 25-34. This falls in line with Spotify’s main

target audience of millennial users. 22% of respondents were between the ages of 35-45, and

11% of respondents were between the ages of 18-24.

Q5: Do you most often stream music from a desktop/laptop or a smartphone mobile app? If you

do not digitally stream music, write N/A. (Optional)

Responses:

From these results, it is noted that the majority of respondents (6 in total) stream music

from their desktop/laptop computers, which is quite surprising given the popularity of

smartphones. Only 3 respondents stated that they stream most often from their smartphones,

while 1 respondent stated that he streamed most often from his personal tablet.

Recommendations

Overall, Spotify’s brand elements are cohesive, consistent, and aesthetically pleasing.

However, Spotify’s marketing efforts have fallen short in the areas of brand awareness and

overall market share. If Spotify truly seeks to increase its market share to 14% and its overall

Tablet

Smartphone

Desktop/Laptop

0 1.5 3 4.5 6

Region 1


brand awareness to 60%, it will have to consider the following brand recommendations to better

appeal to its Millennial audience.

Goals

To increase Spotify’s market share and brand awareness to improve overall brand equity.

Objective

Increase Spotify’s market share to 14% in a 12 month period.

• Strategy #1: Increase Spotify’s free user base through promoting activities that drive

conversions.

• Tactics: From the survey results above, the #1 fear of Millennials centered around

cost — either that Spotify cost or would require its free users to eventually pay for the

service. Therefore, it is recommended that Spotify begin to aggressively promote

activities that drive those free conversions. “For example, if Spotify user data

suggests that when a Facebook friend sends a non-user a playlist, that non-user is

5x more likely to download Spotify, it needs to begin strategically encouraging that

behavior and reducing the friction for that behavior, whether it is through e-mail

marketing, new notifications, or better feature design — whichever method depends

on what works best based on A/B testing and experimentation” (Young, 2015).

• Strategy #2: Lock in more paid consumers through the use of internal analytics.

• Tactics: Currently, Spotify has one of the leading free-to-paid user conversion rates

of any digital music streaming service in the industry. However, if it seeks to grow

and defend its market share, the brand must continue to lock in paid customers

quickly. “Spotify needs to conduct a cohort analysis to segment users by behavior

and develop ways to incentivize actions that lead to conversions through more

personalized e-mail marketing, notifications, or promotional programs. Maybe all it


takes to convert a non-paying Spotify user is adding a feature where Spotify

automatically creates playlists for users based on what they listen to, or a notification

reminder that gets users to download playlists to their phone for offline listening. Find

the ‘A-Ha’ moments - or the behaviors that dramatically increase switching costs for

users - and structure the Spotify experience around encouraging those

activities” (Young, 2015).

Objective

Increase overall brand awareness by 60% in a 12 month period.

• Strategy: Raise brand awareness among American Millennials by creating more multi-

platform advertising campaigns.

• Tactics: Like the brand did previously with The Voice, it is recommended that Spotify

continue to launch multi-platform advertising campaigns with 30 second TV spots

during episodes of popular Millennial television shows. While it is important that

Spotify continues to advertise during The Voice, they could easily expand to other

talent shows like American Idol. Additionally, since Spotify is seeking to expand its

brand to “more than music,” it is recommended that they extend their advertisements

beyond music shows as well. Some of the most popular Millennial television shows

include: Empire, Scandal, The Big Bang Theory, Family Guy, The Simpsons, and How

to Get Away With Murder (Consoli, 2015). Each of these shows averages millions of

views per episode in the Millennial demographic, and this viewership could greatly

increase brand awareness. The advertisements could also be featured on Spotify’s

YouTube channel, website, app, and social media channels for a more integrated feel.


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