EXPERT COMMENT: Why Relationships Hold The Key To The Music Streaming Industry
The launch of Apple Music came as no huge surprise to the music industry – it was only a matter of time before the tech titan stepped into the subscription arena and out of the ‘download age’. In the last few years, a once-in-a-century transformation has taken place – the move from buying products to subscribing to services. This has been especially apparent in the way we want to consume music. The transition from physical records, to CDs, to downloads, and now subscription-based streaming reflects our preference for the convenience, access and flexibility of an ‘on-demand experience’.
Today, subscription services sit at the heart of the music business, representing 23% of the digital market and generating US1.6bn (GBP1bn) in revenues, according to the IFPI. With Apple joining a variety of other players including Spotify, Deezer, Rdio, Tidal and others, the music streaming market is now extremely crowded, but with very little product or service differentiation. So how can Apple Music stand out? With such similar product offerings across the market, the winners will be the ones that are able to build the most genuine relationships with the most powerful judges – the music fans themselves.
Jumping Out From The Crowd
Until recently, the music streaming market has seemed like nothing more than a Spotify monopoly – with the popular music streaming app adding 10m new users in the last two months of 2014. In 2015, with the launch of Tidal and Apple Music in particular, the market suddenly looks more competitive. With this in mind, half the battle for a new music streaming service is attracting a new user, or in Apple’s case converting a user, to a subscriber.
One method is to offer a service, or part of it, for free. Spotify launched its service using the ‘freemium’ model, and this has been paramount to its success. By attracting a loyal base of users accessing its free ad-supported service, Spotify has managed to convert many of these into fully paying subscribers. Currently it has 20 million paying subscribers across the world, from a user base of 60m.
Apple is aiming to pull in 100m paying subscribers, but with 800m loyal iTunes users already in place, it’s in a great position to start this process. Apple Music comes with a free three month trial, a clever incentive which will allow users to become familiar with the benefits of the service to the point where they may not want to go back. At such an early stage in the subscriber relationship, the technology behind the streaming service needs to be dependable and of high quality. Excessive loading times, platform crashes and interrupted playlists can be a game changer for most users- especially when it happens more than once, or at a bad time.
Understanding That Every Music Fan Is Unique
Once a music service has attracted a new user, the next step is to build genuine and mutually beneficial relationships with individual subscribers. Insight and analytics are central to this. Building an understanding of each unique subscriber gives services the direction they need to enhance and totally personalise the user experience.
Netflix is a great example of this – it has invested a lot of money and time into its analytics division to evaluate and understand how many times a viewer pauses, replays, switches over, and browses content to make sure its service is as fine-tuned as possible. Netflix has even used this insight to shape content, assessing overall viewing trends and which genres were particularly popular. In doing so, Netflix was able to create its own original content, House of Cards.
Apple Music will do well to accrue as much insight as possible on all the factors that shape an individual’s experience with music in all aspects of their lives. Apple Music can then use this insight to start offering a razor-sharp personalised service for each subscriber, enabling it to nurture and build ongoing relationships.
Building Long-Term Relationships
One of the keys to a healthy long-term relationship is continued investment in it, showing you both understand and value the user. Personalised playlists and curated suggestions based on your listening preferences are a great way to achieve this. Spotify has excelled in helping its users discover new music and new playlists based on listening data. With its ‘human curation’, Apple Music appears to be taking a slightly different route, with its playlists being curated by select artists and experts. Apple believes that humans input, rather than solely relying on algorithms, is its trump card for helping listeners discover new music. In doing so, Apple must be careful not to miss the opportunity to build an individual experience for each and every listener based on one ‘expert’ selection.
Insights can also help cement subscriber relationships by opening opportunities to ‘treat’ them. If Apple Music knows you are an avid Arctic Monkeys fan, it could potentially add a special feature to your account, giving you exclusive access to their new album for a week or special VIP tickets for the next concert. These kinds of benefits not only attract the attention of subscribers, but also surprise them, get them talking and keep them on board for the long haul.
Winning The Relationship Game
In such a fast-moving and competitive market, Apple Music has a significant journey ahead. But ultimately, it’s a case of which service will dedicate the time and effort to build individual relationships with each and every one of its subscribers, giving them the best possible music experience on an ongoing basis. The customer, after all, is king.
About The Author
Zuora helps any business in any industry to launch or shift products to subscription, including the Financial Times, Schneider Electric, Box and TripAdvisor. Tamsyn Attiwell is Zuora’s VP Global Services, working closely with all business streams to support the company’s EMEA expansion into France, Benelux, UK, Germany and South Africa.