Background of Industry and Companies
Spotify and Pandora are significant stakeholders in the music streaming industry, which dates back to the 20th century. The platforms provide registered users with the access to music released by various artists all over the world. They charge for playing music and then pay the agreed percentage of royalties to the musicians. Spotify was founded in April 2006 by Daniel Ek and Martin Lorentzon. Its headquarters are situated in Luxembourg City. The firm deals in the sale of streaming rights for music belonging to artists who have enrolled for the service (Wlömert & Papies, 2016). Currently, the platform has 207 million users, with 96 million paying for the service (Schneider, 2019). The organization’s revenue in 2018 amounted to more than 5 billion dollars (SEC.gov, 2017).
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Pandora is radio music streaming organization that was founded in January 2000 by Will Glaser, Jon Kraft, and Tim Westergren. It offers internet radio services, which are charged to accord the musicians with royalties for their music. Its headquarters are in Oakland, California, USA. By the end of 2018, it had 71.4 million active users (Naveed, Watanabe & Neittaanmäki, 2017). Its native clients are Universal Windows, Android, and Apple. Both companies have been operating in the music streaming market for a long time now, and thus, their marketing strategies could be informative for other prospective businesses.
Marketing Strategies
Spotify
Targeting. Spotify targets the youth audience who access the internet regularly. The company enables the generation of customized playlists. Its mobile phone application enables the users to adjust the quality and type of music they can listen (Naveed, Watanabe & Neittaanmäki, 2017).
Positioning. Spotify has created a progressive brand that recognizes the impact of technology in business. The company’s advertisements are usually comprised of youth who illustrate their delight in its services. Thus, it is positioning itself as a youth firm with the aim of appealing to its target audience (Lee & Waterman, 2012).
4Ps. Regarding the place aspect, Spotify avails its services in 28 countries across the globe. It offers online music streaming services. The price of the provided songs is dependent on their rating on the Billboard charts all over the world and the reputation of the musician. Spotify conducts the promotion of its services through advertisements (Lee & Waterman, 2012). Some of the advertising mechanisms the company uses are organization of global artist tours, leaderboard displays, and sponsored 30-minute sessions for the clients to enjoy free services. Furthermore, it advertises via vide takeovers when 30-second videos are demonstrated in between the progress of a music video.
Packages. Spotify avails three distinct packages. The first one is called the freeloaders which is charged at $5 per month. It also offers a family plan package for $15 per month. However, there is an ad-less service going for $10 more.
Linkages and outcomes. As per the records of the 2017/18 financial year, Spotify had made a net profit of more than 5 billion dollars. Therefore, the index indicates that the marketing strategies of the company are effective and can only be elaborated to improve the subject statistics. The high profitability is attributed to its wide market base and availability of its services in many countries.
Pandora
Targeting. Pandora’s main target market comprises of radio listeners who are currently the members of the X generation. Since the company provides music streaming services, it targets the middle-aged persons who were youth when the company was launched in 2000 (Naveed, Watanabe & Neittaanmäki, 2017).
Positioning. Pandora has positioned its brand as the custodian of tradition. Radio listening is a long-standing traditional over the world. Therefore, the company capitalizes on the tradition to avail royalties for musical artists (Verboord & Noord, 2016). Additionally, Pandora recently bought Sirius XM Holdings which facilitates the streaming of music and non-music content.
4Ps. The company currently operates in three countries: the US, New Zealand, and Australia. The price of the music stream is charged as a package for the session and depends on the music played (Lee & Waterman, 2012). Its main product is the service of radio music streaming. The company promotes its service by playing jingles and organizing musical tours.
Packages. Pandora offers two distinct packages. The first one is named the individual downloaders which is charged at $10 per month. It also offers a family plan package for $15 per month. However, there is an ad-less service going for more than $15.
Linkages and outcomes. Pandora is significantly profitable according to the 2017/18 records. The company made close to 3 billion dollars in net profits. The main hindrance to the profitability of the firm is the locational constraint as it is only available in three countries; the US, New Zealand, and Australia. Thus, it has a limited market (Verboord & Noord, 2016).
Takeaways
The positioning of a brand is a significant determinant of its profitability and overall progress. While Spotify positions its services as progressive and millennial, Pandora has positioned its brand as traditional and exclusive. Therefore, Spotify is more appealing to its clientele than Pandora. Spotify uplifted their design through specialization on the “radio waves circle” motif. The organization stuck with the white and green with 3D. The branding adopted by Spotify is that it has hugely applied a large color palette. Through the application of duotone technique, green happens to be the primary color while the gradients act as pop art graphics.
On the other hand, Pandora adopted another takeaway is that promotional activities of the company considering that it is more appealing in the market (Web FX, 2018). While Pandora is highly dependent on jingles and media tours, Spotify is taking advantage of internet to advertise and earn high royalties, which are further attracting more artists to their brand. Additionally, the geographical availability of a firm’s products in 28 countries puts it in a better position to have a higher profit marine as opposed to Pandora which has its presence in only three countries.
Besides Spotify’s readiness to adopt new technologies have an upper hand when it comes to increasing its profits. Unlike Pandora, Sportify uses a phone application. The application is widely used and it is also easy to customize play list according to the consumers interest. In conclusion it is evident that the marketing strategies that the company employs in its daily running have a considerable effect on the wellbeing and profitability of the firm. I this case Sportify enjoys a bigger profit than Pandora due to its efficient marketing strategies which are characterized by innovation and studying the changes in the market.
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References
Lee, J. H., & Waterman, N. M. (2012, October). Understanding user requirements for music information services. In ISMIR (pp. 253-258).
Naveed, K., Watanabe, C., & Neittaanmäki, P. (2017). Co-evolution between streaming and live music leads the way to the sustainable growth of the music industry: Lessons from the US experiences. Technology in Society, 50, 1-19.
Schneider, M., (2019). Spotify hits 96 million paid users, scores first operating profit in fourth quarter. BillBoard. Retreived from https://www.billboard.com/articles/business/8496809/spotty-fourth-quarter-financial-results-paid-user-totals-2018
SEC.gov. (2017, February 5). Retrieved from https://www.sec.gov/
Verboord, M., & Noord, S. V. (2016). The online place of popular music: Exploring the impact of geography and social media on pop artists’ mainstream media attention. Popular Communication, 14(2), 59-72.
Web FX. (2018, November 19). How to roll radio spend into pandora and spotify. Retrieved from https://www.webfx.com/blog/marketing/how-to-roll-radio-spend-into-pandora-and-spotify/
Wlömert, N., & Papies, D. (2016). On-demand streaming services and music industry revenues: Insights from Spotify’s market entry. International Journal of Research in Marketing, 33(2), 314-327.