It didn’t come as much of a shock when Spotify announced that they have reached the milestone of 155 million paid subscribers, following a successful 2020 fourth quarter. The music streaming giant has grown steadily over the last year, coming away relatively unscathed and making up for earlier losses in the year at the start of the pandemic. Despite finishing the year healthily, boasting a 24% increase in premium subscribers and a record 74 million user increase last year, questions have arisen about Spotify’s potentially rocky road going forward, as it faces unprecedented challenges in 2021.

Spotify now faces the threat of unexpected competitors through alternative brands like Peloton, TikTok and Epic Games, who streamed a Travis Scott concert live on Fortnite to a digital audience of a whopping 12 million gamers. You would expect their most fierce competitors to be the likes of Apple Music or YouTube but, in recent times, non-traditional brands have made serious attempts at gaining a significant foothold in the audio market, by offering highly successful and innovative audio experiences to their users. 

Moreover, TikTok is now a solid platform for new and emerging artists to make their big break and is consistently setting new music trends. The recent Sea Shanty wave, which was born out of TikTok, displays the power of the platform for artists, as it resulted in the viral hit going to number two in the UK official music charts and garnering global recognition. Additionally, TikTok claims over 70 artists that have broken on the platform in the last year have signed major label deals. This demonstrates a clear opportunity for artists to work with brands, representing a new model for achieving mainstream growth.

A strategic use of sound

Fitness brand Peloton is now in the business of debuting new exclusive music and partnering with artists. This is the perfect example of a disruptive alternative brand as, on the surface, they are just a home fitness equipment brand, but they’ve capitalised on the relationship between music and fitness. Now, Peloton’s revenue has been growing at an annual rate of over 100% since 2018. If you consider the market share of Peloton, it would still take another 500 other similar size brands, for the likes of Apple Music and Spotify, to have a real problem on their hands.

This is the perfect showcase of the power of music and sound in creating strong emotional connections between a brand and their consumers. Like the traditional spin class, they use music to make you go crazy on the pedals, spinning so fast to a BPM of 112 that I spend the rest of the afternoon picking up pieces of my kneecaps. The power of music.

This shows how strategic uses of music can build your brand by engaging audiences more effectively. More emphasis needs to be placed on sound going forward when brands market their product.

For Spotify, this means challenging times, as their new competitors have made it even more tricky to monopolise listening. It also outlines how crucial it is for them to make brand partnerships to stay relevant with ever-shifting culture and consumer behaviours. 

This being said, podcasts have been a vastly successful arm of Spotify’s offering. Now everybody has been stuck inside for a year, not only does every person and their dog have their own podcast, but we have also witnessed a rapid growth in podcast listenership figures. Incredibly, Spotify now hosts over two million podcasts with 25% of its user base engaging in podcast content between October and December 2020. 

Recently, Spotify announced they are going to implement podcast adverts even for premium subscribers in an attempt to financially capitalise on its surging popularity. However, the jury’s still out as to whether this will disenchant their users. 

Don’t follow the obvious path

All of this speaks to two things. Consumers are evidently looking for new ways of entertainment, and consumption has increased during lockdown. This means that there are more brand opportunities to reach consumers in novel ways. According to data from Antenna Analytics, the streaming market grew by an extraordinary 37% in 2020, which shows surging demand is there to be taken advantage of by brands.

Secondly, the lesson that Spotify is learning about looking outside the sector, is also a wider lesson for other brands not to just follow the obvious path, as success might be found elsewhere. 

As it stands, Spotify’s strategy for growth in 2021 seems pretty route-one. Extending their successful podcast offering and expanding their service into South Korea are currently the two standouts, but will this be enough? When you consider the moves being made by their new challengers over the last 12 months, it might be time for Spotify to change their tune.

Capitalising on the data they have been accumulating for the past 13 years is a significant advantage they hold over new challengers as they can more effectively understand the needs and wants of their users. 

This is also a great opportunity for advertisers, as Spotify can accurately place adverts by using their data to target users based on their listening habits. To take advantage, they have invested heavily into this, and they now host an impressive array of ad tools to execute highly effective targeted advertising.

Ultimately, this shows the power of sound and exposes the huge potential for brands to be heard by way more people. Standing out from the crowd is vitally important and the success of TikTok, Peloton and Epic Games’ challenge to Spotify is the perfect example of the great things that can happen when you dedicate more time and resources to sonic strategy.