Spotify for Artists
Spotify is a data-driven music streaming service that provides personalized content to individual listeners. While music subscribers are their main customers, Spotify operates with a multi-sided model and has other businesses including Spotify for Artists, a platform dedicated to supporting artists at all levels of their careers.
As part of a Global Executive Masters Program, I assessed Spotify for Artists’ business model, interviewed their target customer (the DIY Artist) to determine whether the needs of the business were meeting the needs of the musicians and put forth a strategic recommendations to bridge the gaps between the two.
Interviewed Spotify Employees
Analyzed Business Models
Conducted Comparative Analysis
Assessed Competitive Landscape and Industry Trends
Mobilized and Planned
Scoped Research Plan
Wrote Research Guides
Recruited Interview Participants
Created Interview Schedule
Researched Company Background
Redesigned Spotify for Artists Business Model
Made Strategic Recommendations Based on Artist Needs
Conducted Risks and Benefits Assessment
Created Artist Persona
Prioritized Artist Activities
Assessed Model Sustainability
Generated Themes and Insights
Spotify for Artists Business Model
Created to combat the piracy epidemic in the early 2000s, Spotify pays 70% of its total revenue in royalties to labels and their artists. Other major expenses include music licensing, acquisition of data firms to provide personalized content, staff salaries and benefits and the infrastructure costs required to support the numerous servers supporting global streaming. For the DIY Artist, being on Spotify is desirable for two reasons: the platform provides access to listeners they would not otherwise be able to reach and an additional form of revenue based on streams.
The majority of Spotify’s revenue is generated from paid subscriptions. Spotify offers tiered access to their service ranging from free and ad-supported to Premium. Following a Millennial research study conducted in 2016, Spotify understands that its subscribers use Spotify has the soundtrack to their lives, and as such, have strategically leveraged partnerships with companies like Starbucks, Bumble, and Waze to be everywhere their listeners are. Other potential sources of revenue include:
Partnerships: Acquisition technique for both parties to increase their reach by dipping into each other’s client pool
Advertising Dollars: Spotify has developed a custom suite of services for advertisers to create targeted campaigns based on their needs
Record Labels: Critics speculate that in order to advance their artists, labels pay premium amounts for playlist placement
Spotify for Artists offers Streaming Intelligence services to all verified artists providing basic demographic information (age, gender, physical location, and streaming frequency) in a custom dashboard. In addition, they have created “The Game Plan”, an educational video series, and “Co.Lab”, an invitation only set of workshops, to provide guidance along the way. In addition, last year, they launched RISE, an artist development program “designed to identify and break the next wave of music superstars."
The DIY Artist
personas based on user interviews
To better understand whether Spotify for Artists was meeting the needs of its target audience, I interviewed up and coming musicians and singer songwriters who had been living and working in LA for approximately 2 years and had recently released singles on Spotify. As a part of these interviews, we discussed all of the jobs they do on a daily and weekly basis, and it became quite apparent that the DIY Artist wears multiple hats. They are their own PR companies, investors, agents, managers and so on, and that if they were ever to relinquish one of those hats, their expectations of the person filling the shoes would be incredibly high.
The pains were much more emotional. A theme emerged around feeling increasingly frustrated when it came to not getting the support they feel they need both financially and emotionally. With that came the looming fear of never finding success.
Despite the pains articulated above, the DIY Artist has a clear set of desires and expectations for their career and future success.
After synthesizing the research, three major themes emerged:
The investment never feels like enough. Artists trying to make it themselves are wearing the hats of musician, song writer, producer, manager, booking agent and more. Much is out of their control, and so they feel like they are letting down both themselves and others when they are not working 24/7. It’s impossible to know if what they’re doing is working, and the data they do have isn’t giving them a clear picture of what’s actually going on. So even though all the money they make is poured back into the music, many artists suffer from burn out and depression due to the feeling that so much effort is being put in with very little measurable return.
Success has everything to do with money. To the DIY, financial success is a “nice to have”, but money is a crucial factor in the execution of the jobs that really matter. While they are not driven by money, they have to make an upfront investment or “buy-in” to even get a seat at the table. Key jobs like building relationships through coffee dates or going to other artists’ shows or the creation, production and distribution of musical and digital content all require money to start. In the beginning, you’re lucky if you’re breaking even.
They are always fighting for significance. More than anything, the DIY wants confirmation that they are on the right path and to feel like there is forward motion in their careers. Bigger than payouts or plays, the DIY is most creatively nourished when they are sought after by other creatives they respect and when they feel creatively nourished by the people around them. Remaining relevant and impacting a group of people larger than they can physically reach are large drivers, and the possibility of not being able to do these things is their greatest fear.