Any product has its life cycle, so how to maintain growth has become a major problem for companies. As one of the world's most popular streaming music service platforms, Spotify has never encountered growth problems.
In 2020, music consumption in travel scenes will be greatly reduced, and many streaming music service platforms are in a growth dilemma. Only Spotify's paid subscriptions are still growing.
According to Spotify’s first-quarter financial data released on April 29, 2020, only the advertising business was affected, and the total number of active users reached 266 million, an increase of 15 million month-on-month and 69 million year-on-year.
Among them, paying users reached 130 million yuan, an increase of 6 million paying users compared with last year. At the beginning of the year, the number of paid subscribers increased by 30 million, a year-on-year increase of 31%. The growth rate was beyond the reach of many peers. Seeing this, everyone can't help but wonder, how does Spotify build products? What is its strategic approach?
In fact, from the development of Spotify, we will find that its strategic approach is similar to the super product strategy. First of all, it is important to seize the opportunity. In 2008, the entire streaming media has become the driving force of the recorded music market.
Not only that, in the process of enterprise development, Spotify launched a monthly subscription price of 9.99 euros to attract users to subscribe, which means that each paid subscriber only needs to pay less than half the price per month to get the use of genuine streaming music. Service Platform. Soon, the number of subscribers continued to grow.
From the perspective of user data, the growth trend of Spotify in relatively mature markets such as Europe, North America, and Latin America is saturated. In order to further attract users to subscribe, Spotify has adopted more promotional activities in these regions.
For example, Spotify has reached a cooperation with a US telecom operator, joined the Unlimited&More Premium event, and chose a bundled package method. Users do not need to pay extra for subscription services, and as a telecom operator, users can also apply for a 6-month free premium Subscription service. In addition, Spotify also introduced student discounts and family packages.
Warner Music Group once commented on this: celebrities and music depreciate in this growth model, and abuse of family plans and other promotional methods are all at the expense of corporate interests.
However, this sentence has no effect on Spotify. In its super product strategy, user value must be higher than commercial value. Only after owning users and meeting user needs can the company obtain excess returns.
Therefore, in addition to substantial promotions, Spotify continues to expand globally to tap new users. The price customization in emerging regions such as Africa and the Middle East is reduced to $5.35 per month, and six accounts can be bound.
Soon, we will find that in Spotify’s super product strategy, the main strategy is growth, not maximizing revenue. We want to seize the opportunity for users to gradually shift from traditional broadcasting to online audio, in order to occupy market share. In other words, if you want to attract users for services and expand your user base, you will gradually become the industry leader. Unsurprisingly, Spotify leads the streaming media music service platform, a large vertical market.
Under the super product strategy model, as time goes by, although Spotify still lowers prices in emerging regions, it has begun to try to raise prices in some developed countries.
Due to occupying a certain market share, Spotify's price increase did not generate user churn rate, but played a role in attracting new players.
This is exactly the difference between Spotify and Amazon, Youtube, Apple and other competitors. Music is the main product of Spotify. Therefore, if you want to find more profitable ways, you can only occupy the market after the streaming media market is saturated. With a certain market share, price increases will not be affected.
In February of this year, the founder of Spotify announced a new strategy for corporate development in a podcast. Audio is not only music, but also Spotify's future. The adjustment of the strategy is due to the reduction of advertising business and the control of copyright costs.
In the increasingly competitive environment of global streaming music service platforms, Spotify has to find new profit points. In fact, from the perspective of Spotify's development, with their rapid business growth, they should become more profitable. However, However, because advertising revenue is not satisfactory, Spotify’s strategy for this is to expand into the podcasting field through advertising. In other words, it is to insert advertisements in original podcast programs so that the podcast host can read the advertisements to the audience. This move breaks Spotify’s insistence on never pushing ads to paying users.
Not only that, to accelerate the acquisition of podcast companies, Spotify is constantly updating the company's advertising business. Just in April this year, Spotify expanded its independent advertising business to a global scale. Doubled the number of ads.
Podcasting can not only bring new power in the advertising business, but also solve Spotify’s business problems. This is because in Spotify’s business model, its marginal cost is very high. For every additional piece of music sold, you have to First, record companies pay an extra copy of copyright. In order to reduce marginal costs, more users must be attracted. As a result, the three major recording companies agreed to reduce copyright fees.
In the super product strategy, users are always the capital of the enterprise. The more users you have, the greater the advantage you have.
Even though podcasting is a relatively small business for Spotify, it has huge potential in its field. As more and more streaming music service platforms are added to the podcast market, the media field is entering the podcast's gold era.
In addition, short video social services are impacting the global streaming music service platform. In May of this year, Spotify began testing video podcasts, which means that Spotify is about to enter the short video field.
On one side is the streaming music service platform, on the other is podcasts with growth potential. Coupled with the increase of short video business, Spotify’s super product strategy is undergoing tremendous changes with the development of the market, precisely because many streaming music service platforms fall into As a growth problem, Spotify, as a giant in the industry, leads its counterparts in the streaming music service platform to stand in the same trench and compete for the audio field.
As far as the super product strategy is concerned, there is nothing great about being a big one. The difficulty is how to promote the development of the entire market.