By LEE XIE
Imran Sobh, a 30-something user experience designer and New Yorker, listens to music around the clock. He can often be found at his desk, headphones in, the latest track from Kendrick Lamar playing loudly while his head bobs to the beat. Sobh’s headphones go in during the commute to work and do not come off until bedtime. He is willing to pay $10 monthly for an ad-free Spotify premium subscription that gives him the ability to listen to his playlists offline while commuting and to maintain focus while at work. “I paid to get rid of the ads because they were driving me nuts,” Sobh said.
Many other millennials subscribe to streaming services. if they have earphones, they have at least one music streaming app on their phone, and the music industry is taking note. As listeners start to pay for music via the subscription format, a new crop of streaming services has emerged, hoping to tap into the potentially huge market.
Case in point? When Kanye West finally dropped his much-anticipated new album “The Life of Pablo” after album title changes and Twitter rants aplenty, it was not on iTunes. Instead, fans were told that TLOP was a Tidal streaming exclusive, catapulting the service to number one on the iTunes App Store for the first time. Tidal just happens to be Jay Z’s foray into the music streaming business. Go figure.
Strategies like this are becoming more commonplace as other music streaming services such as Spotify and Apple Music multiply and compete for the millennial’s ear (and money). So far, Spotify seems to be winning the battle by creating a social listening experience that appeals to its user base, one where users can “follow” their friends’ playlists as well as their favorite artists, receiving automatic updates when artists they follow release new music. With ovemore than r 30 million subscribers worldwide, it leads both Apple Music, with 11 million subscribers, and Tidal, with only a few million, by a long shot.
Spotify offers a free streaming service that includes advertisements in addition to a premium, paid subscription that takes out ads and offers offline listening and music synced across devices, computer and phone. It was the first to enter the music streaming market, giving it a huge advantage in comparison to Apple Music and Tidal, experts say. “Spotify was way ahead of the streaming game. The way in which they offered free and paid accounts was a stroke of genius. This gave consumers a chance to experience streaming for the first time and not even pay for it,” said Jason Birkwood, head of marketing at Bamboozle and former executive at Warner Music South Africa.
Spotify has also been able to appeal to millennials (they make up 65 percent of its user base), a key demographic, through its strategy of integration with social media. Users are prompted to sign up with their Facebook accounts, linking their listening activity to their accounts and creating organic advertisements for the company. “By giving users the ability to socially share and promote playlists, Spotify presents the user with a different kind of experience,” Birkwood said. And within the service, Spotify taps into millennials’ craving for personalization through its “Discover” playlist, which updates weekly for users and includes music suggestions tailored to their taste. These features all speak to a more social listening experience that has attracted consumers to use Spotify within the music streaming space.
The marriage of the words “music” and “social” is driven by the finding that among millennials, music is a “connector” that inspires listeners to “build passionate communities around the music and artists they love,” according to Vevo’s 2015 “Music Fan Report.” In the study, 72 percent of millennial music fans said music helps them connect with friends and family. 65 percent said they belonged to a “fan army.” Spotify has tailored its user experience to these realities and flourished as a result.
Yet some listeners do not like “third-party” apps and prefer to use Apple Music, which is already installed on their phone. Matthew Teng, a junior at New York University, subscribes to Apple Music because it easily syncs with the Apple products he uses every day. “I think it’s very convenient because it’s already on my iPhone. I don’t like third-party apps. Apple is a brand that I can really trust because I have an existing relationship with the brand,” Teng said.
For $10 monthly, Apple Music offers beyond iTunes playlists and allows the customer to enjoy listening to the entire iTunes music library. Free extra features include Beats 1 Radio, a radio station hosted by popular DJs, Connect, a space where fans can explore exclusive content from their favorite artists, and personalized music suggestions. But Apple Music’s biggest advantage may be its brand name, which has drawn in loyal Apple customers like Teng. “Apple was able to regain the confidence of their previous download consumer and convert them to Apple Music customers. In music streaming, I believe people look for platform stability, content and ease of consumption…Apple ticks all these boxes,” Birkwood said. Earlier this year, Apple SVP Eddy Cue said Apple Music has over 11 million paid subscribers. While Spotify Premium took five years to hit that mark, Apple Music did it in only six months.
While millennials such as Sobh and Teng gravitate between Spotify and Apple Music, they agree that their friends are not picking up on Tidal. Its model is built on premium -sound quality and assuring that artists, especially famous ones that have strong relationships with Jay Z, are compensated for their work. But both messages do not seem to be priorities for millennials. “I don’t care enough for whatever Tidal offers. They say they have higher quality audio but Spotify seems good enough,” Sobh said.
Tidal offers either a $10 monthly subscription or a $20 subscription that streams high-fidelity sound. In additional to Kanye West, Rihanna also released her latest album, “Anti,” through the service, and more high-profile artists are sure to follow. Beyoncé, one of the world’s most popular artists (who just so happens to be Jay Z’s wife), just released her new music video for “Formation” on the platform. “We have the Tidal trial just to see Beyonce’s new video,” said Mike Gratton, a New Yorker in his early thirties who works in management.
Using its star power, however obviously, may be a way for Tidal to attract some much-needed buzz. However, experts are skeptical that it is an effective long-term strategy. “Exclusives are effective to get attention, but the traction will go away as the next ‘exclusive’ comes to market. I think it is an ok model, not a great one,” said Ralph Jaccodine, assistant professor of music business and management at Berklee College of Music, who has worked in the industry for more than 20 years.
With the competition between music streaming apps heating up, experts in the music industry are noticing a trend that points to a transition towards subscription-based streaming, evidenced by the nearly 50 million streaming customers split between Spotify, Apple Music and Tidal. “Streaming music services will soon be like gyms and mobile phones—just another monthly payment that customers have to budget for,” said Allen Bargfrede, associate professor of music business at Berklee College of Music, who has advised music artists, record labels and content distribution companies alike. For competing streaming services, capturing the millennial customer may ultimately rely on factors that allow listeners to build their own music community, something that Spotify has recognized, giving it an edge in the market. “The traditional way of listening to music has changed dramatically. In this day and age, the ability to extend your listening experience socially is a must. Sharing has become a key part in our daily lives and music is riding that wave,” Birkwood said.