Spot on in Indonesia: How Spotify Took on Southeast Asia’s Largest Market

Gone are the days when the go-to places for music were found at local shopping malls. With the shift from music listening being associated with Walkmans and CDs to digital files, music streaming services have become possible.

Around the millennium, new services for getting your music fix emerged  with peer-to-peer file sharing. Ongoing controversies over issues, such as copyright violations, piracy and lack of transparency, paved the way for the music streaming services that we see flourish today as the number one way to listen to the latest hit songs and stay on top your favorite artists’ releases.

Streaming music – everywhere and at anytime
One of the biggest players in this increasingly competitive market is Spotify that launched back in 2008. The music streaming service quickly witnessed success by significantly reducing piracy rates in Sweden, its country of origin, and by providing a real alternative to file sharing platforms for both the music industry and consumers. Spotify went on to enter new markets and became the first really successful streaming service in the U.S. when it launched in 2011.

To date, Spotify is available in around 60 markets with an expansion in the Asia-Pacific region adding significantly to the list of recent new markets. “– Our aim is to be everywhere where music can be streamed”, says Serena Leith, Director of Marketing APAC. “We are committed to the music industry and want to ensure that everyone is able to access music conveniently and legally.”

Having spent more than a decade in the music industry for giants like Warner Music and Universal Music Group, the Sydney-based Australian joined Spotify in May 2012 with the launch of its music streaming services in Australia and New Zealand. At this point in time, she is responsible for the brand development, user growth and all consumer-facing marketing activities across the entire Asia-Pacific region.

Pushing the Launch Button
In March 2016, Spotify took on the biggest market in Southeast Asia with the launch in Indonesia, home to 250 million people. For many business analysts, Indonesia might seem like an obvious choice with its young population and high smartphone penetration. Yet, it took a few years from rumors about Spotify entering the big island nation to the music streaming service actually pressing the launch button.

Launching a new music service takes time, commitment and passion, and we would not rush into a market unless we are absolutely certain what we bring is relevant, legal and perfectly suitable to the nuances of that market.

“ – No matter which market we are in or looking to enter, we are constantly thinking about the market’s music streaming needs and wants. Launching a new music service takes time, commitment and passion, and we would not rush into a market unless we are absolutely certain what we bring is relevant, legal and perfectly suitable to the nuances of that market”, explains Serena Leith, listing crucial issues of having localized music content, an app in the local language in addition to proper payment structures and partnerships based on the country among other things.

“– With Indonesia in mind, we had the platform localized across mobile, desktop and tablet with it being available in Indonesia’s local language, Bahasa, for the convenience of our users. Apart from that, we also looked into the music and playlists that were being curated. Alongside fantastic international playlists, Spotify’s Indonesian music experts have put together the best playlists from top Indonesian hits to Bali lounge and Dangdut, with a very broad and deep catalog of local music. In that way, Spotify provides the best music to match any mood. We are always looking at ways to educate and highlight local talents to Indonesians”, Serena Leith adds.

A Successful Start
Having done its homework properly, Spotify has witnessed a successful start to its Indonesian endeavors according to Serena Leith: “– Indonesia is one of the fastest growing markets for us in Southeast Asia. We are thrilled to have launched so successfully here and be so well embraced by Indonesian music lovers so quickly. Spotify has already begun to cement itself as a favourite music streaming service here. We’re expecting exciting times ahead.”

The numbers are clear to back up Serena Leith’s claim that Spotify has become an integral part of the lives of many Indonesians: “–Three months after the launch, we saw that Indonesian users had spent a whopping 1.165 billion minutes streaming on Spotify. Users are spending an average of 90 minutes a day streaming music from the platform with the majority of users in Indonesia streaming on Spotify between 12pm to 4pm and again from 8pm to 11pm. We are keen to see this excitement grow even more, and to support the local music industry.”

A Match made in Heaven?
While Spotify has definitely done the required homework, the stats about Indonesian consumer market show that Spotify and the Indonesia mobile music listener is a match made in heaven. According to the latest report from eMarketer, the number of smartphone users in Indonesia will rise from 55 million in 2015 to 92 million in 2019, and Indonesia has already become the third-largest smartphone market in the Asia-Pacific region (after China and India). Indonesia’s expanding middle class is increasingly using smartphones in their daily activities, including e-commerce, video calling and, of course, streaming services.

Facts that make Serena Leith believe that Spotify has a bright future in Indonesia: “– We spent time researching the behavior of Indonesian users and we believe that our offer as the world’s best music service to Indonesia – completely free to all music fans – would fit well with Indonesia as a “mobile-first” market. Spotify can be easily downloaded and installed on their device, whether it’s a smartphone, tablet, PC, or even on PlayStation consoles. Users can enjoy more than 30 million songs wherever and whenever they are, as long as they are connected to the internet.”

Payment
While the readiness of Indonesians to use Spotify’s services was there, the music streaming company faced a major obstacle when it came to infrastructural issues. One particular issue was the payment for its premium product, Spotify Premium. While debit and credit cards are the norm in most Western countries, the usage of such payment method is less widespread in Indonesia: “– Understanding the local culture and infrastructure was key to our user acquisition strategy. We spent a lot of time looking at ways in which we could adapt our processes to the infrastructure already in place in Indonesia,” the Director of Marketing explains.

Understanding the local culture and infrastructure was key to our user acquisition strategy. We spent a lot of time looking at ways in which we could adapt our processes to the infrastructure already in place in Indonesia.

“– For the payment method, if a user is keen to switch to Spotify Premium, we looked into making the process convenient for our local users. Aside from providing credit card payment, of course, we have introduced various payment schemes that would fit users’ needs. Payments for Spotify Premium can be made in a variety of ways. Users can pay for their premium subscription via credit card, bank transfers or using ATMs. They can use local app payment solutions like Doku Wallet as well as purchase in-store at Alfamart, Lawson and Dan+Dan stores nationwide. Most recently we announced that we are working with Fortumo to provide further carrier billing options for our users.” In addition to such payment initiatives, Spotify has also made its app available for free on PlayStation™Music for PlayStation®4 and PlayStation®3 owners as well as a number of other companies related to media devices, such as specific phone carriers.

Do your Research before you Enter
Research is vital for a market entry success in any of the Southeast Asian markets, if you ask Serena Leith: “– You need to have proper insights and a thorough understanding of the local market; that is absolutely essential. This should not just be limited to the laws and regulations which are very important, of course. Understanding the cultural nuances of each country is super important in order to become a relevant and loved brand in a new market.”

As a country, Indonesians love their music, especially if it is on a service that is able to bring people and communities together.

The specific issues to be clarified will vary for every business, but for Spotify it was crucial to really understand what matters most for users in Indonesia.”– As a country, Indonesians love their music, especially if it is on a service that is able to bring people and communities together. We believe that we have the service to do just that. From a vast variety of music genres to collaborative playlist functions, we offer users the best features and content; both international and local. If we keep doing that and continuously improve our offer, we’re going to be a true staple in many Indonesians’ lives,” Serena Leith predicts and adds as a final note: “– As one of the fastest growing markets in Southeast Asia, Indonesia is definitely a truly unique country. There is so much potential here and we are just excited to be here to provide for the music streaming industry. Everything we do in Indonesia, we ensure that it is relevant and accessible for everyone.”

This blog post is an adapted version of an article that featured in Leverate Media’s company magazine ‘Leverate ONE‘.