“Before Spotify there was a free tier called piracy”, said Seth Farbman, Spotify’s CMO who joined the company this year after serving in a similar role at GAP. Now, his task is to work on branding the music streaming service, and similar to the fashion industry, that means helping users to express themselves.
Spotify occupies a prime spot in the digital music landscape, and Taylor Swift in particular has expressed criticism about the platform’s free service. At the Financial Times (FT) Future of Marketing Summit on Wednesday in New York, Farbman offered his perspective on the current pricing issues, how the services evolved, the brand’s communications challenges and marketing opportunities moving forward.
Below are key takeaways.
Conveying streaming music’s benefits
Farbman said, “Spotify’s founder, (Daniel Ek), believed that technology could make the struggling music industry better by creating a social platform where users could share and discover music. Streaming increases music access by removing the decision about which songs to buy. Yet the ongoing communications challenge has been to explain the value of this disruptive model.”
Accounting for cultural differences
“Spotify is a Swedish company, with a culture of letting the work speak for itself. But that approach doesn’t work as well in the U.S., and here we need to be more proactive with our story.”
Addressing pricing issues
Among Spotify’s 75 million users, only 20 million are currently paying a subscription fee, while 55 million are using the free or ad-supported service. That’s been an issue for Taylor Swift, who removed her music from Spotify last year in protest against the free music offering.
Farbman said Spotify’s business model is part of a funnel and that its goal is to get more passive users to move to a higher form of (paid) consumption. As for the controversy: “We’re a platform focused on the artist community and meritocracy, so if the music is good it will rise to the top. But we’re evolving, we listen and we take all these concerns seriously.”
Moving beyond category building to branding amidst new competition
“Our goal is to develop beyond being a streaming music brand to being a music brand. We want to not just convey why streaming, but also why Spotify,” Farbman explained. That’s especially important following Apple’s purchase of Beats. “We need to take a smarter approach now. Yet Apple is the best competition you could hope for to help validate streaming. Their launch has helped to bring more people to streaming.”
“Our audience is comprised of hardcore music fans, millennials and influencers and our objective is to turn early adopters into tastemakers who offer recommendations, since the best ones come from our listeners”, Farbman said. This spring, the brand introduced video and podcast content and entered into a partnership with Starbucks.
“Now our focus is to reach different audiences according to segments based on their music choices. Our new Discover Weekly product delivers playlists that meet users’ profiles”. He admitted that some users objected to the use of their faces on their own playlist covers. Still, overall he believes that “it’s relevant marketing that shares users’ passion for music.”
Will Spotify be able to overcome its better-funded rivals? Only time will tell.
(Images courtesy of Spotify)