Updated: Jan 30
Both Spotify and SoundCloud are popular music streaming platforms used by millions of musicians and listeners alike. Despite this, Spotify has seen considerably higher adoption both from listeners and major labels. Meanwhile SoundCloud has struggled with major label buy-in and user acquisition. However, these platforms have also historically served different audiences due to key ideological distinctions in the companies’ beginnings. When looking at Spotify and SoundCloud’s marketing campaigns, these contrasts become increasingly obvious. In particular, comparing Spotify’s “Only You” campaign with SoundCloud’s “First on SoundCloud” highlights the key difference in the two streaming services’ business goals.
Spotify’s “Only You” Campaign
Spotify was founded in Sweden in 2006 by two tech entrepreneurs, Daniel Ek and Martin Lorentzon. In an interview with The Telegraph in 2010, Ek said he first came up with the idea for Spotify in 2002 after Napster shut down and Kazaa took its place. Watching the situation, Ek realized “that you can never legislate away from piracy. Laws can definitely help, but it doesn't take away the problem. The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry – that gave us Spotify” (Neate, 2010). Spotify as a response to piracy was a resounding success. The service revolutionized the music industry, spawning numerous competitors. Currently, Spotify has 456 million monthly active users (MAUs), making it the digital service provider (DSP) with the highest market share (31%). Its service is available in 184 markets with 53% of its user base located in the US and Europe. Its freemium model (offering both ad-supported free plans as well as paid subscriptions) pays artists royalties based on the number of artists streams as a proportion of total songs streamed. Spotify distributes around 70% of its total revenue to rights holders like the major labels who then pay artists according to their separately established contracts.
However, Spotify’s royalties system has led to major disputes with artists who rely on the streams to make money. Despite being the largest driver of revenue to the music business today, artists make little from streams after rights holders have taken their cuts. On average, Spotify pays artists between $0.003-$0.005 per stream. As a result, many artists strongly dislike the platform, with some notable artists like Taylor Swift even initially refusing to release their music on it.
“Only You” Campaign
With Spotify’s “Only You” campaign, the company focuses on its popularity amongst its existing listeners by creating in-app experiences and personalized playlists using listener data as well as advertisements across TV, social, digital, and out-of-home options that present listening trends of fellow fans. The result is one of the most personalized marketing campaigns in the music industry.
The campaign is brightly colored so as to be eye-catching, and the personalization allows the viewer to feel valued by the company. The ads also noticeably avoid any gendered imagery, colors, or fonts to allow them to appeal to viewers of any demographic. According to Neal Gorevic, the global head of consumer marketing at Spotify, the campaign’s goal was to celebrate “the uniqueness of each listener through fun stories that highlight the diverse tastes and interests across our global community. Whether you start your day with an episode of ‘Crime Junkie’ or spend your afternoon blasting ‘Rap Caviar’ while replying to emails, how we listen is a reflection of our personalities and who we are. No matter how you listen, you have a home on Spotify” (Chintakindi, 2021). Through this campaign, Spotify successfully achieves its goal, engaging the more than 356 million users on the platform. Doing so allows them to retain users who might otherwise be tempted to switch to rival services like SoundCloud.
Because these types of campaigns from Spotify are so intensely personalized, they often feature very few direct acquisition components. Instead, Spotify relies on users to become their marketers: allowing and encouraging the sharing of individual results on social media with friends and family who may then be enticed to join Spotify to create their own results. Consequently, Spotify has created a marketing campaign that feels like a feature and value-add to the consumer rather than a sales message. Spotify users look forward to these types of campaigns in a way few advertising campaigns are able to achieve.
SoundCloud’s “First On SoundCloud” Campaign
SoundCloud was founded in Berlin in 2007 by Alexander Ljung and Eric Wahlforss. Whereas Spotify founders Ek and Lorentzon came from tech backgrounds, Ljung and Wahlforss’ experiences came from professional music careers as a sound designer and electronic musician respectively. They created the platform with the goal of being a way for artists to share and promote their music. As a result, SoundCloud has evolved beyond just music streaming, serving as “an artist services and distribution business to help artists grow long-term, successful careers” (LinkedIn, n.d.).
To further support that goal, the company has focused on a revolutionary royalty model called fan-powered royalties. In essence, while royalties on platforms like Spotify come from a pool that is paid out to artists based on their share of total streams, fan-powered royalties allow artists’ earnings to be based on their fans’ actual listening habits. Per SoundCloud’s website: “The more of their time your dedicated fans listen to your music, the more you get paid. This model benefits independent artists” (SoundCloud, n.d.).
This focus on equitability and artist development has made SoundCloud extremely well-liked amongst independent creators, particularly in the rap genre. An estimated 25 million creators use SoundCloud with many artists like XXXTentacion, Juice Wrld, Smokepurpp, Lil Uzi Vert, Lil Peep, Ski Mask the Slump God, and Lil Pump starting on the platform and rising to Billboard success. However, SoundCloud still falls far behind other DSPs in terms of MAUs on the listener side, with only an estimated 76 million monthly users.
“First On SoundCloud” Campaign
Unsurprisingly, in the “First On SoundCloud” campaign, the company focuses on its popularity amongst creators by telling the stories of artists who have found success on its platform. The stories of ten artists from SoundCloud’s global community are told and promoted across SoundCloud apps, playlists, social feeds and newsletters, as well as social and out-of-home advertising.
The design of the marketing relies on a graphic design scheme that is reminiscent of one used by sports companies like Nike or Adidas. The images are washed out and desaturated. The fonts are either large and blocky or shaky and handwritten. In the first story of the campaign, which focuses on Taylor Bennett (the younger brother of Chance the Rapper), the video creates a vintage feel by editing certain scenes to look like Super 8 film. The campaign markets heavily to young creators who would benefit from the platform, offering the use of hashtags to be featured across SoundCloud media as its primary acquisition method.
While not personalized for each individual like Spotify’s “Only You” campaign, “First On SoundCloud” feels personalized to the company’s goals, mission, and audience in a way the Spotify campaign does not. By highlighting the stories of SoundCloud artists, it feels distinctly like something that could only be produced by SoundCloud whereas “Only You” could be done by any company with user data.
Conclusion: Which Campaign Is More Effective?
Because the target demographic of each campaign is different, examining which is more effective depends somewhat on which market is being discussed: listeners or artists. For listeners, Spotify becomes the clear winner. It puts each individual user at the center of the campaign through an innovative and interactive plan that feels exciting and fun. The SoundCloud campaign does not have this level of listener personalization and loses the broad appeal that “Only You” provides. For artists though, “First On SoundCloud” is superior. It uses success stories to inspire musicians to come to its platform in the hopes of being the next Taylor Bennett. With the addition of the hashtags to allow for possible features on SoundCloud playlists, it activates music industry hopefuls to create on its platform. By comparison, Spotify’s campaign almost does not focus on the artist at all. Artists are only relevant in terms of how they relate to listening trends. Consequently, the two campaigns highlight the intrinsic differences between the platforms that date back to each company’s founding: Spotify, the convenient platform for listeners, and SoundCloud, the launching pad for artist promotion.
Please note: this article was initially written as an assignment for the Berklee College of Music graduate class "The Business of Music Marketing."
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