I am excited! Not just about the fact that Forrester's Marketing Forum is just around the corner. I am excited because I just got to spend some time with Ross Martin, the energetic executive vice president (EVP) of MTV Scratch. His team is a center of innovation at MTV for helping marketers connect with millenials, and his enthusiasm for the next digital decade is palpable. If you are coming to the Forum in San Francisco next week, you will get to hear Ross and his client and counterpart Jim Trebilcock, CMO at Dr. Pepper Snapple (DPS) Group, talk about the nationwide launch of Sun Drop soda that kicked off a few weeks ago.
Not to spoil that story, here are some of the things Ross and I discussed about the future of marketing:
DC: Given what you have done with DPS, what do you see as the future agency model? Can media companies replace agencies?
RM: We see new and inspiring work from agencies every day and have been lucky to collaborate with some great partners. Much has been said about the challenges agencies face with so many new models emerging. We believe these new models will continue to evolve, as agencies large and small pursue new ways to serve their clients.
Great agencies will look to capitalize on the strengths of media companies in both traditional and nontraditional ways — from ad sales and integrated marketing to the kinds of services Scratch offers, such as design and product planning, retail activation, creative execution, social media, marketing strategy, and more.
I’ve been covering the digital music space for over a decade now, and when I first started doing so, EMI were one of, if not the, most innovative of the major record labels. They soon relinquished that mantle though, with Universal Music rushing to an apparently unassailable lead in the innovation stakes. And of course in more recent years EMI have had other more pressing distractions. But I’ve always had something of a soft spot for EMI, and it’s nice to finally be able to write about some truly innovative and "ahead of the curve" news coming out of Wrights Lane.
EMI have just announced a new iPad app version of Swedish house producer supergroup Swedish House Mafia’s "Until One." The product is actually an app version of the trio’s book and album combined with additional features layered on top (see screen shots below). Features include:
Spotify have announced their 1 millionth premium subscriber. No doubt about it, 1 million paying subscribers is a big deal. No one else has done it in Europe or the US despite years of trying (that’s including stalwarts Rhapsody and Napster and new boys MOG and rDio). But the true significance of the milestone will be defined by what comes next.
1 million subscribers is an achievement worthy of celebration, but it is not (yet) evidence that premium subscriptions are a mass-market value proposition. Indeed when you take an impassioned view of Spotify’s premium offering, it’s actually not a lot different from what’s been in the market for years in the shape of Napster’s and Rhapsody’s portable subscription products. Sure, it is implemented in a superior manner (offline playlists, etc.) but the fundamentals remain the same: pay a monthly fee for music you never own.
The simple fact is that rented music for a monthly 9.99 fee is not a mass-market value proposition. Spotify’s 1 million represents 10% of their total installed base (though closer to 15% of their active users). So it is clear that the free Spotify product is many many times more popular than the paid-for product.
To break through to the mass market, Spotify will need to more aggressively pursue their subsidized partnerships (e.g., 3 and TeliaSonera) where the end user pays little or nothing for the service with it bundled with another product. That third way, navigating between the mass-market free consumers and the niche premium customers is the long-term route to mainstream premium customers for Spotify (and all other subscription services).