Spotify Has a Gen Z Problem.

Spotify is the most popular paid audio service in the world and continues to add tens of millions of customers a year. But several executives at the company have expressed concern in the past few months about Generation Z, people born in the early 2010s.

The average person in Gen Z listens to fewer podcasts than millennials, Gen Xers or baby boomers. Some of this may be a function of their youth. People listen to podcasts on their way to work, and in transit. Young people dont work, and often travel with their parents. Young people also listen to the radio less often than older people. But this isnt just a music problem. The one app beloved by Gen Z is TikTok. Spotify has long seen TikTok as a friend and a funnel. People hear a song on TikTok and then go to Spotify to listen to the whole thing. But TikTok is now more of a rival in a lot of emerging markets. TikTok has introduced its own music service in Brazil, Indonesia and India, and its starting to get a following.

When Spotify reported disappointing user growth in the second quarter, it blamed the pandemic, which has made growth choppy and forecasting hard. It cited problems with sign up via a third party provider. (It was Facebook.). The very services that brought millions of media consumers onto the internet and redefined culture are now confronting the challenge of middle age. They have to appeal to a new generation of users raised almost entirely on mobile devices.

Spotify believes its concerns about Gen Z could also present an opportunity. TikTok is more of a direct substitute for You Tube (and Instagram) than Netflix or Spotify. Thats why You Tube has invested so much in its new short-form video product Shorts. While TikTok competes with Spotify for time spent, it is not direct competitor in audio.

When it comes to audio, Spotify is already ahead of many of its direct competitors since its audience trends younger than Apple or Amazon. Spotify has sought to increase appeal to Gen Z podcast listeners by doing deals with social media influencers like Alex Cooper and Addison Rae. Coopers show Call Her Daddy is popular among women who are elder Gen Z (women aged 20 to 24). Spotify is also working on new tools it says are helping with music listeners. Gen Z accounts for the majority of the people using Blend, a shared playlist between friends. Gen Z is also the most engaged audience with Spotifys annual Wrapped campaign. Year-end data highlights that Gen Zs music taste is definitely different than the core Spotify user.

Since every app is threatened by TikTok, Spotify is also testing a new destination on its main app that will offer snippets of songs set against a vertical video. Customers can also hear snippets of podcasts with text that appears on the screen. The format more video, shorter form is supposed to appeal to young users, and also generate additional data. Its that by offering videos just 15 seconds in length, it collects more data about its users taste than just about any other media

company. Relevant examples must be given in relation to the case studies.

Question 3

(a) Marketers can change consumers responses through Stimulus Selection Factors. Explain any THREE (3) approaches that can be used by Spotify to influence consumers to have positive responses. Provide relevant examples to support your answer.

(b) Based on the Big Five Personality Dimension, explain any FOUR (4) dimension of personality that can increase consumer usage of Spotify. Provide relevant examples to support your answer.