Marketing -- The Old Rules Still Apply

Last week Spotify made the puzzling announcement that they were shifting their US Media Planning Buying from Starcom to 360i. The move itself wasn't puzzling, 360i is a good agency run by very smart people, what was puzzling was the accompanying commentary from Spotify's VP of Creative and Strategy: "We're not a brand that plays in traditional media". Now the marketing trade pubs might have taken that comment out of context as it was reportedly said a year ago; but it does seem to be this spirit that led Spotify to hire 360i -- a digital-only shop.

As far as I know there is no published rule book for Communications Planning, but if there were one on page one of that book if would say:

You can't keep doing the same thing and expecting different results. When using only one media channel you reach a plenum or plateau and you begin spending more and more for less and less results because essentially you are talking to the same people.

Spotify has reached its plateau.

According to reported figures, their paid subscriber growth stalled sometime around March of 2013 and while they have been able to drive growth recently by close to 50%, these spikes have largely been driven by deep discounting which will likely result in a high churn rate once all the freebee's run out. So what once was hockey-stick line of growth has now become almost a flat line and I suspect it was one of, if not the reason, for the agency change.

Spotify has a number of issues facing it not the least of which is that artists are starting to pull their catalogues because of the royalties they are paid...or more appropriately not paid. Taylor Swift is the most recent and prominent artist to do so but Adele, Radiohead, Coldplay, David Byrne, Beyonce and The Black Keys all have either pulled their catalogue or only allow Spotify access after time has passed after new releases.

Spotify is also facing real competition for the first time by companies that nobody wants as competitors -- Apple and Google. Beats Music (owned by Apple) YouTube (owned by Google) are figuring out how to go to market in a significant way with streaming music.

However, the competition is still in their infancy and it is only big name artists who can afford not to be on Spotify, so neither one or both can be used to explain away lack of real growth.

Spotify's biggest current problem might well be themselves and their philosophy that they don't "play in traditional media".

If Spotify, and the investors that keep funding them, desire for something more than straight-line subscriber growth, they might want well want to begin "playing" in little bit bigger marketing sandbox than they have been playing in up to this point.