Music streaming giant Spotify has launched its service in eight new countries, taking it to a total of 28 markets worldwide. The Sweden-headquartered firm is expanding into Asia — via Singapore, Hong Kong and Malaysia — and Latin America — via Mexico — for the first time, while it has added support for Estonia, Latvia, Lithuania and Iceland in Europe.
The company — which has 25 million active users — lets users to listen to up to 40 hours of music for free via its ad-supported platform per month. Those that want more can opt for the ad-free ‘Unlimited’ service (for desktops and laptops) or the Premium service for multiple devices, including mobile. The two paid-for services have 6 million users.
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TNW discussed the plans for Asia in more detail with Spotify’s Hong Kong-based regional head Sriram Krishnan, who is, rather fittingly, a Malaysian who has worked in Singapore, Hong Kong and the company’s native Sweden.
Before we continue, it’s worth noting that Spotify Unlimited is not available in Asia. Users can chose the free option or the Premium service, which is charged at SG$9.90/HK$48.00/MYR 14.90 per month in the three new countries. That makes some sense given that mobile is seen as the key platform to enabling widespread Internet access in Asia.
‘The perfect stepping stones’ in Asia
The move is a significant one for Spotify as it takes the company into a continent that has huge potential for any Internet-based firm. Asia is, for example, Facebook’s largest continent — with more than 250 million registered users — and that scale has attracted the likes of Airbnb, Uber and other growing companies that have expanded into the region lately.
While Krishnan declined to give specific details of Spotify’s schedule for rolling out into other markets in Asia, he did reveal an ambition to expand to new markets in the future.
“We aim to be available in every market in the world, and that takes time, initially we are coming to Malaysia, Singapore and Hong Kong,” he said.
“Content consumption in Asia is different [to Western markets], so we took the necessary time, investment and resources to provide the right service, which we’re confident fans in these countries will embrace.”
The choice of markets is interesting. All three are among the most affluent, on average, in the region — excluding East Asia — and yet, with a joint population of less than 45 million, they are relatively small markets in which Spotify can get to grips with different environments.
Krishnan says that the trio of launch markets are “the perfect stepping stones” which were chosen for a number of criteria, including healthy indie music scenes and advanced social behaviours, with the use of Facebook particularly prominent. Those factors are probably true for other countries, and the relative organization of local music industries may well be a critical factor too.
Beating rampant digital piracy
Another significant point behind Spotify’s arrival in Asia is that it is facing arguably its most difficult climate for success. Digital music sales are well established in most of Europe and the US, yet in Asia, many Internet users lack the means and awareness to buy music legally.
Krishnan rightly concedes that digital piracy is rampant in Asia. More than half of Singapore’s Internet users — who are comparatively savvy for the region — visit illegal music and movie sites, he says, and turning that around is very much the ambition of Spotify.
“I want to see Spotify stamp piracy out,” he explains. “Our [Premium service] price points are sweet spots that we believe will turn people away from piracy to a more legal setting like ours.”
While there’s no doubt that the Spotify model has plenty of potential for Asia, where it has barely been tested, gaining awareness is likely to be a key factor for the company.
Marketing and carrier partnerships
Spotify’s first advertising campaign in the US is estimated to have a budget in excess of $10 million, which included a $400,000 YouTube ‘takeover’ ad splash, but there is no such big budget for Asia. Krishnan says that Spotify will assess how its US campaign goes before making any decisions about promotional activities elsewhere in the world.
That, in theory, leaves the door open for deals with carriers. Spotify has arrangements with a range of operators in Europe — including Deutsche Telekom in Germany — while many content firms, including Evernote and even Spotify’s French rival Deezer, enjoy the benefits of similar tie-ups in Asia.
Deezer launched in Southeast Asia in August 2012, initially in partnership with Dtac in Thailand. Deezer CEO Axel Dauchez described that deal, and operator relationships in general, as “a powerful way of helping people explore this revolutionary new way of listening to, discovering and sharing music”.
Krishnan confirmed that Spotify won’t take that route on launch, but he did not rule it out for the future in Asia.
“We have telco relationships in 11 markets so we are open to working with Asian operators,” he explained. “We want to increase the touch points between us and users in the region, even if that means telco partnerships.”
Bringing local artists to the world
Spotify isn’t solely focused on bringing new consumption models to Asia, as it is also looking to provide a global platform for local artists. Though Krishnan was unable to provide specific details of how many, or which, labels and artists from the new countries would be added to Spotify’s 20 million-plus track catalogue, he said that artists from Singapore, Malaysia and Hong Kong will feature among the estimated 20,000 new tracks added to the service every day.
Spotify last week added Traditional Chinese language support to its iOS app, but Krishnan refused to be drawn on a potential launch in China. He did, though, call the country “interesting for the music industry”, due to the sheer scale and estimations that 99 percent of its digital music is pirated. For now, he says, Spotify will maintain an initial focus on its launch markets.
The company is setting up offices in Hong Kong and Singapore, where it is hiring for a range of positions. Krishnan said that local sales forces are likely for future country expansions, but other offices could be created in the future too.