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Long way for paid subscriptions to break through in India: Spotify’s Neha Ahuja

Spotify, which commenced its India operations in February 2019, recently rolled out its national campaign. The multilingual campaign features Anil Kapoor and Ishaan Khattar as a father-son duo and revolves around their fun banter. 

Created by Leo Burnett India, the campaign encourages users to ‘Keep Listening, Uninterrupted’. 

The Spotify app is available to download for free or with an upgrade to Spotify Premium for Rs 119 per month. Spotify comes to India with a mix of features, including more than 50 million songs offering Indian and international music, personalised music recommendations and the freedom to play across a wide range of devices and app integrations. 

In an interaction with Adgully, Neha Ahuja, Head of Marketing – India, Spotify, sheds further light on Spotify’s marketing and advertising strategies, revenue model, the road ahead and more. 

Please share some insight into the latest campaign – ‘Keep Listening Uninterrupted’.
This campaign stems from the insight of how music has become a vital part of India’s daily social fabric, where people rely on music as a strong medium of emotional connect and resonance to navigate through their lives. Right from coping with tough situations and celebrating happy ones, to managing the common conflict between personal ambition and social norms, some kind of dichotomy fuels our lives. Through it all, consumers actively complement their daily moods, moments, and relationships through music, actively listening to the latest tracks, or sitting back and listening to mood-based music in the background. This campaign perfectly highlights our ability to seamlessly integrate music into the lives of the user. 

Read more: Growing competition in OTT music space triggers a price war

What was the brief to the Creative Agency/ Production house that executed the film in terms of insight and creative vision?
While life is not easy, music is your constant companion; a medium that helps enhance the experience of your social experiences and moments, offers emotional support as an effective coping mechanism, and importantly, acts as a social element to strengthen bonds between friends and family across life’s many moments. We wanted to highlight this overarching message through a carefully crafted story, portrayed through the father-son relationship. Having Anil Kapoor and Ishan Khattar bring life to the father-son campaign personalities has helped immensely to garner consumer attention and love. Both bring a great amount of charm, fun and relatability as our lead protagonists. Their in-campaign chemistry has seamlessly brought alive the parent-child chemistry built on pillars of friendship and new age thinking, all connected through music. 

Spotify uses OOH extensively, what are the marketing plans for this campaign?
We design our media mix based on the business task at hand. That said, this time around, the national marketing outreach has been TV led. As this is our first national on-air campaign, we leveraged paid media, ensuring that we maximise audience targeting through on-air and OOH activations. We reached out to audiences across the country that consume content via dominant genres of GEC, Movies, and English Cluster, as well as regional channels in Maharashtra and Andhra Pradesh. 

From an OOH perspective, the priority markets were Mumbai, Delhi, Hyderabad, Pune, Bangalore, Guwahati. Actors Anil Kapoor and Ishan Khattar, artists including international and local ones (Taylor Swift, Kate Perry, Justin Bieber, Alan Walker, Badshah, Sunidhi Chauhan, Salim Suleiman, Jonita Gandhi, Armaan Malik, Diljit Dosanjh) and influencers have helped us drive content on social media, building credibility for the brand through mass appeal amongst the growing maturing user base, driving users to the app. 

How do you plan to tap the regional market?
When it comes to a market as dynamic as India, we are focused on three things – making sure that what we say is reaching across markets, and in languages that matter to them; second, that we offer the latest music in as many local languages as possible and through playlists, whether algorithmic or editorial, and even user-curated, that appeal to our listeners; and third, an app that makes sense for our users, right from background play and relevant recommendations, to the launch of Spotify Lite and access to Spotify across platforms, including Google Voice Assistant, PlayStation, Tinder, and beyond. 

When will subscription revenues in India for music streaming reach a tipping point?
Keeping in mind the sheer dynamic scale of the country, current industry numbers and projected growth trajectory to the market development are extremely encouraging factors. That said, though there are approximately over 150 million audio streaming listeners in the country, only 1 per cent actually pay for music. So, when we are talking about current penetration, it may seem minor, but when we talk about market potential for growth, it is huge. Currently, the free tier contributes to mass consideration and stickiness, and there’s a long way for paid subscriptions to break through; this will change as the industry cracks the habit of piracy to free streaming and we build consideration from free to paid. 

What is your revenue model?
Spotify generates revenues from brands that advertise on our free service, and from users who pay for our subscription service. Both are important for us, and we want to give users the opportunity to use whichever tier works best for them, which also explains why we have a price range from daily to annual subscription. Currently, India is more ad-driven (free tier) compared to the mature markets. 

What is the way forward for Spotify’s growth in India?
Our campaigns will continue to centre around users; for us, they are at the heart of all our innovation – whether in the product itself or in the way we market it. In the current campaign, the final ad that we have put out around BTS has done extremely well. That relatability matters. Also, playlists, latest music and podcasts, user experience, and product features will continue to evolve on the platform and as invested industry partners, we are focused on growing the market by creating a healthy industry value chain, driving value for our partners, including labels, creators and brands. Here, we believe there is immense opportunity for growth in transitioning users from the mindset of piracy towards streaming music and are committed to undertaking that.

Now we offer more than 50 million (5 crores) songs and 3 billion (300 crores) playlists for music fans in the country, available across 79 markets.

Monthly Active Users (MAUs)

Total MAUs grew 29% Y/Y to 232 million, outperforming the high end of our 222-228 million MAU guidance range

Premium Subscribers

108 million Premium Subscribers globally, up 31% Y/Y but below the midpoint of our guidance range of 107-110 million

Revenue

Total revenue was €1,667 million in Q2, representing growth of 31% Y/Y

Premium revenue was €1,502 million of the total and grew 31% Y/Y, ahead of expectations

Ad-Supported revenue was €165 million and grew 34% Y/Y, a meaningful acceleration of growth from Q1

Podcasts

Our podcast audience grew more than 50% Q/Q and has nearly doubled since the start of 2019

Major Label License Renewals

Spotify has reached agreement with two of our four major label partners on the renewal of global sound recording licenses, and are in active discussions with the other two

Two-Sided Marketplace

Number of top tier artists (those representing the vast majority of streams) has grown another 36% to more than 30,000 (globally)

Developments:

During Q2, we launched a number of new product initiatives across our major regions. One of the major highlights was Spotify Lite more widely (presently in 36 countries), and this offering is now available in 36 markets

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