Spotify vs. Beats: The super cool battles the Super Bowl
Spotify and Beats Music take polar-opposite approaches in how they pitch themselves to you. That difference underscores where they're from -- and where they're going.
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Beats Music and Spotify have very different ideas of what marketing means: It's all, or basically nothing. Respectively.
If you've never heard of either, you're easily forgiven. Beats Music and Spotify are both streaming music services that, unlike Internet radio Pandora, offer the ability to listen to a specific track on demand, and both can be accessed anywhere without commercials for about $10 a month. But Spotify barely ever advertises in the US, relying instead on word of mouth, and Beats Music has yet to hit the two-week mark of being up and running (well, most of the time.)
See also: Spotify, Rdio, Beats Music, and more: How to get started with subscription music services
At least one of the services won't have mainstream anonymity for long. Beats Music will be offering itself up at the altar of the almighty Super Bowl commercial spot Sunday night, introducing itself to a mega swath of America.
These polar opposite strategies perfectly reflect the origins of these two streaming services. But not only that, they also reflect where the companies want to go. The question is: Can both get there?
Where they came from
Beats Music is a spinoff of Beats Electronics, the headphones company founded by rapper Dr. Dre and longtime music industry executive Jimmy Iovine. The company is known for hyper-hyped products that critics dismiss as being all celebrity endorsement and little substance, but even critics can't fault Beats for the success of its strategy. Its splashy branding and big-name partnerships struck a chord with mainstream consumers, giving the line the biggest share of the headphone market.
It's a model the company is working to deploy with its offshoot, Beats Music. Built out of the purchase of MOG, Beats Music has already advertised during the Grammys in its short life since launching Jan. 21. Before its rollout, it had full-page ads in the New York Times. It has set partnerships with AT&T, Target, and -- as much of America will see during the Super Bowl -- Ellen DeGeneres.
A Beats spokeswoman said the company's marketing objective at its launch is to build awareness and encourage people to "try the next generation of music services."
Spotify, we'd presume from that line of thinking, would be the first generation of music service. The Swedish-based music service launched in 2008, and quickly spread throughout much of Europe thanks to partnerships with mobile carriers before it hopped over to the US. Here, most of its success has been by word of mouth. It had a limited marketing campaign last year, but on the whole publicity has been understated and all digital.
What they've done
A Spotify spokesman said the company's marketing focuses on crossing many mobile, social and digital channels. "We've also seen that fans referrals have always been the best way to grow our community, and a lot of our efforts focus on more personalized content and programs tailored to them," he said. Spotify won't be completely missing in action during the Super Bowl, however -- it's getting a shout-out in a Sonos ad.
The under-the-radar approach is something that reflects Spotify's Swedish roots, said Ryan Aynes, co-founder and managing director of Edge Collective, a branding agency. "Sweden is a culture of 'What we've got is good' and they don't always need to tell the world about it," he said. It's an attitude that "when you make great products and that's just in your blood, people will figure it out."
Beats, on the other hand, is all about flash.
Larry Chiagouris, professor of marketing at Pace University's Lubin School of Business, estimated that between the cost to air a 30-second spot during the Super Bowl -- this year it's being pegged at about $3 million to $4 million -- and the cost of recruiting DeGeneres as a spokeswoman, Beats Music could be shelling out something in the vicinity of $10 million.
That would represent a sixth of the $60 million the company raised last year to split off from Beats Electronics.
"That's a lot of money to spend, but given the fact they have to play catch-up with so many streaming music services, the only way they can fast forward is to do exactly what they're doing," Chiagouris said.
Put another way, it is betting heavily that the slick marketing that make Beats headphones a cultural phenomenon will work for Beats Music too -- even if they're not sure yet how Beats Musics really works.
"If the brand is new, you don't even know if the business model works yet," said Oren Harnevo, chief executive of Eyeview, a company that provides ad-targeting technology. "It's definitely like somebody playing casino, but there's no better way in the world to get 110 million people to know about you right away."
Where they are going
By running the Super Bowl route, and doing it with DeGeneres, Beats Music is being clear about who it's chasing -- the non-Spotify customer.
The Super Bowl audience is mainstream, versus the streaming music audience right now, which is anything but. That audience is big in cities but not the great swath of middle America, and it's popular among younger people aged 25 to 35 but not their parents, noted Aynes, the managing director of Edge Collective.
More women watch the Super Bowl than the Grammys and the Oscars combined, Aynes also noted, and given that the message of the Super Bowl ad -- Ellen DeGeneres putting its family-discount deal with AT&T front and center -- it's clear who Beats Music is targeting: moms and dads. But mostly moms.
Spotify, as the most successful in a group of early streaming services, had a strategy that for worked at the time and place it was coming into its own, said Forrester analyst Jim Nail. "But only one company can do that in a category," he said.
Beats Music, meanwhile, is defining a different customer and betting that streaming music can make a break from a niche thing for young people to become something mass market. "If they're right, then they're in the right place at the place at the right time," said Nail.
That's not to say that Beats Music, in one very expensive maneuver, will be putting Spotify out of business -- it's still early in the race. The question is whether Beats Music's marketing blare can drown out all the other streaming music services, like Spotify.
Beats Music is hoping that like the headphones, it can do just that.