Spotify and UMG are rocking the music world with a marketing move that’s making artists take note. The mutually beneficial partnership brings promotional power to both brands and is an exceptionally savvy move to make at any time, but particularly right now from a consumer and market intelligence standpoint. Let’s check it out!
In doing so, we’ll explore several interesting dynamics surrounding the partnership, including:
- Emerging trends in the morphing music space.
- How the match looks from a market intelligence perspective.
- Gaining consumer love by catering to unmet needs.
And before we get going, here’s a few stats to keep in mind going forward:
- From 2015 to the first quarter of 2020, Spotify has grown from 18 million subscribers to 130 million.
- 40,000+ new tracks are uploaded by artists to Spotify every day.
- As a percentage of U.S. music revenue by format, paid streaming subscriptions grew from 17.2% of total market share in 2015 to 53.4% in 2019.
Let’s take a look at how those numbers stack up, and how Spotify and UMG captured its ‘two-sided’ marketplace.
Emerging Trends in the Morphing Music Space
Since the days when vinyl was king in the music industry until today, the way people consume music has changed repeatedly. Cassette tapes came to dominance briefly before giving way to the overwhelming popularity of CDs. Later, digital downloads took over becoming the preferred method of music consumption as the internet got its legs. And then streaming music came along.
Recorded music revenues had flatlined in 2010 after ten years of steady decline. In 2016, growth was spurred on again by the burgeoning music streaming industry – and consumers have flocked to the format in record numbers since.
To put it into perspective, in 2019 total U.S. revenues for recorded music topped $11.1B, of which, paid subscription streaming services accounted for a whopping 53.4%. This doesn’t even include the revenues generated from limited tier paid subscriptions or ad-supported streaming which accounted for another 15.7% of the market in 2019. In other words, streaming has become the undisputed king of the hill; and it’s showing no signs of slowing down.
While consumers have gotten increasingly cozy with their streaming services during the COVID-19 crisis, artists have seen them as a lifeline. They had to, since their incomes from live events and concerts were reduced to virtual tip jars overnight.
Artists Working Harder Than Ever
As such, artists have been at the helm of emerging trends like virtual concerts in an effort to bolster visibility and reclaim lost revenue.
The pandemic has forced artists to get creative in the morphing music space and they’ve delivered. Like when hip-hop artist Travis Scott partnered with Epic Games to host an in-game concert to 12.3 million viewers on Epic’s wildly popular Fortnight at the end of April.
Desperate times call for creative measures; and artists are exploring every opportunity to maintain connections with their audiences. Will these types of innovations continue when live shows resume? That’s left to be seen, but it’s definitely opening doors to new opportunities in the music industry in the meantime.
Match Made in Music & Market Intelligence Heaven
The coronavirus brought with it need and uncertainty on a global scale. In the music industry, artists still needed to put food on the table; while quarantined consumers with unprecedented free time nervously clutched their earbuds. It’s times like these where innovation based off of sound market intelligence pays off with a win-win for brands, as well their partners and consumers.
And that’s just what Spotify and Universal Music Group (UMG) accomplished with their recently announced global, multi-year license agreement. A press release stated that the deal “further aligns the companies’ efforts to foster groundbreaking new features providing value for artists and great experiences for music fans.”
For Spotify, the deal secures the streaming rights for UMG’s enormous catalog, including heavy-hitters Taylor Swift, Lady Gaga and Rhianna. UMG stands to maintain high visibility for itself and its artists thanks to Spotify’s 130 million monthly subscribers – which is certainly helpful since no one is touring right now. UMG will also act as an “early adopter of Spotify’s future products and provide feedback to Spotify’s development team as those products are being built,” according to TechCrunch.
Spotify has long championed its ‘two-sided marketplace’ approach where one side represents revenues from subscriptions and advertising, while the other denotes revenues from artists and music labels paying for tools to reach listeners. With a deal in the books with UMG, Spotify has heft on both sides. And you don’t have to look further than the NYSE to see they’re getting things right.
The agreement brings together two titans of the music industry for a match made in heaven. It’s what happens when brands base their moves on savvy market intelligence.
Consumer Love & Lots More
If the coronavirus has taught us anything; it’s that consumers enjoy supporting the brands and artists they love and trust. And there’s a lot of consumer love up for grabs in the music industry as fans can’t help but get online and talk about their favorite music.
We mentioned Travis Scott’s Fortnight concert earlier, and it brought on a wave of online sentiment. Below is a snapshot of the top emotions and terms by sentiment surrounding the days just before and after the event. It’s the cream of the crop as far as consumer love is concerned.
As consumers still can’t attend live events right now, we expect to see this trend of virtual music events continue, as it meets the needs of all involved. If your brand can leverage value to artists and consumers in the music space, it’s a great time to get in on the conversation. Just ask Spotify.
Music and Video Game Combo?
Furthermore, there are already blips in the online conversation talking about leveraging the robust video game industry to up-scale virtual concerts. Based on the numbers Travis Scott pulled in, virtual concerts held in virtual worlds might be here to stay. Who knows, when live events return it’s possible that they’re simulcast in-game to continue capturing a broader audience.
As always though, opportunities only abound for the brands that are paying attention.
They say that the future is uncertain … and while that’s true; it’s a whole lot easier to navigate when you’re consistently monitoring emerging trends as part of your market intelligence strategy. To that end, brand leaders use the power of next generation artificial intelligence (AI) to scour millions of articles and social media posts to ensure they’re picking up every piece of intel related to their industry.
Make sure your brand is armed with the actionable insight you need to capitalize on nascent opportunities in your market before your competitors beat you to it. Top brands do it every day, and you can too – reach out for a demo and we’ll show you how!