What marketers can learn from Taylor Swift vs. Spotify

Photo credits: Denys Prykhodov / Shutterstock.com 

Currently, the best lesson in engendering customer loyalty comes from a woman famous for singing, “We Are Never Ever Getting Back Together.” Without a loyal following, no artist or franchise brand could back away from a platform where they serve millions of people a month. But that’s the bet pop star Taylor Swift and her record label have taken this week after pulling her entire catalogue off music streaming service Spotify, which has more than 40 million active users. In a blog post yesterday, Spotify stated it hopes that Swift and Big Machine Records would reconsider their decision, for the benefit of the approximately 16 million Spotify users who have listened to one of her songs and put her on one of 19 million playlists in the past month. “We hope she’ll change her mind and join us in building a new music economy that works for everyone,” Spotify stated. “We believe fans should be able to listen to music wherever and whenever they want, and that artists have an absolute right to be paid for their work and protected from piracy. That’s why we pay nearly 70 percent of our revenue back to the music community.” Even after shaking off Spotify, Swift is expected to sell at least 1 million copies of her new album, “1989.” The marketing lesson I glean from that is that while Swift plays in and excels at all the disparate ways musicians must promote themselves, they are all integrated and serve the end goal of driving sales through the traditional, high-margin method of selling albums. Like Swift, franchise brands might have Twitter followers numbering in the millions and slick marketing campaigns with the right partners, but those brands ought to make sure every piece leads to engendering the kind of brand loyalty she enjoys. The way musicians and artists get their music heard today — and presumably get paid today — more and more is by getting fractions of a penny every time somebody streams a song on services like Spotify, Beats Music or even YouTube. According to an article in Rolling Stone, music consumption has shifted to streaming dramatically in 2014: Year-to-date, album sales are down 14 percent and individual song sales are down 13 percent, Nielsen Soundscan found. However, the same article cites a Recording Industry Association of America report that found paid subscriptions to streaming sites rose 57 percent in 2013. Despite those trends, Swift is prepared to walk away from Spotify, which shows staggering confidence in her ability to sell albums even if casual fans can’t stream her music. The power of her brand and the loyalty of her fans underwrite that confidence, which should be instructive for franchise marketers. The best equivalent I can see would be how a restaurant brand like Chipotle Mexican Grill is positioned compared with its peers in quick-service and fast-casual foodservice. Its most loyal customers stick with the brand year after year because they connect deeply with Chipotle’s “Food With Integrity” message or because they swear by the chain’s food quality when compared with another chain’s. Those same people know that they can get Mexican food for far lower prices somewhere else. But Chipotle derives pretty much all of its sales from moving full-price burritos, and the brand hardly ever runs discounted promotions. Meanwhile, other brands find themselves in a similar situation to the vast majority of musicians. Like the music industry — in which the audience is incredibly fragmented and artists try to cobble together revenue from everywhere like streaming, touring, licensing and sometimes album sales — many of Chipotle’s competitors have to be all things to all people to grow sales. Just observe how McDonald’s tries to simultaneously sell core items like Big Macs and Quarter Pounders, inexpensive items off the Dollar Menu and More, and limited-time offers, all while running the Monopoly promotion every year. Could your franchise brand pull out of a marketplace where you serve 16 million consumers every month? If so, it better have one bulletproof brand and a very loyal following.