Spotify enters Canada with five launch partners

‘This is a big one for us,’ says U.S. advertising executive

Streaming music service Spotify made its Canadian debut this week, nearly five years after it was first rumoured to be entering the market.

Canada is the 58th market for the six-year-old company, which boasts 10 million paid subscribers and approximately 40 million active monthly users of its free service. Its music library totals more than 20 million songs.

Brian Benedik, Spotify’s New York-based vice-president of advertising, North America, acknowledged that the company has been working on a Canadian launch for “some time,” but wanted to ensure it had access to a full catalogue of music before entering the market.

“This is a big one for us, and we wanted to make sure [it] was handled appropriately,” Benedik told Marketing. “We have worked very diligently with our label partners to ensure the music catalogue is full and customized and appropriate for Canada.” He added that it was also “very important” to the company to have a strong Quebec offering.

The big question will be Spotify’s ability to get people to pay for its service in an environment where bands like U2 have taken to foisting their music on unsuspecting consumers for free, and in a market already boasting several streaming services.

Many of these services, which include Google Play Music, Rdio and Songza, enjoy a significant head start over Spotify.

Benedik, though, sounded confident in Spotify’s ability to attract Canadian music lovers, predicting that its free ad-supported tier would be instrumental in generating trial and converting some consumers to the $10 premium, ad-free, subscription.

“We have the learnings from doing this now for six years; we’ve learned a lot along the way,” he said. “That confidence is in no way arrogance – we come into Canada today humble – but we also know this is not our first rodeo.”

Preliminary consumer appetite for the service would appear to support Benedik’s confidence. This summer, in advance of the launch, Spotify worked with online “tastemakers” and “influencers” to seed Spotify pre-access codes, leading to an extensive Canadian wait list rumoured to be nearly half a million people.

The service also worked with Canadian launch partners Diet Coke, Honda Canada, Heineken, Subway Restaurants and TD – as well as global launch partner Coca-Cola – to distribute the codes.

Each of those brand partnerships also includes a six-month media component that includes ads on Spotify’s free tier, including audio and video units as well as display ads such as leaderboards and home page takeovers.

Spotify restricts advertising on its free tier to two minutes of audio advertising per hour. “We are very careful with the ad load and how many ad experiences [listeners] get,” said Benedik.

The Canadian launch comes at a key period in Spotify’s evolution, which is leaving behind its origins as a primarily desktop-based service and embracing the mobile market.

Benedik said that mobile adoption of the service is happening “big-time,” calling the December introduction of a free mobile tier a “pivot point” for the company.

“It took a super-heavy desktop product, and 10 months later it has become very much a mobile-first company,” he said. “Once we were able to get it out to the market in a free tier capacity, it’s amazing how quickly this thing has jumped.”

Spotify plans to rely on word-of-mouth to achieve its marketing objectives in the short-term, but Benedik said it would give “some real thought” to consumer marketing in 2015. Spotify has been in discussion with Canadian representatives from its global media AOR Starcom MediaVest Group, but no specific assignments have been handed out, he said.

“We hope to get some momentum over the first three months and then revisit it in early 2015,” he said. The company is also looking to establish a Canadian sales and marketing team, with Benedik saying several prospective candidates have been interviewed. A decision is expected soon, he said.

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