On-demand music subscription service Spotify officially launched operations in Mexico on Tuesday with advertising support from Coca-Cola, which locked an exclusive 15-day deal to run its soft drink spots on the service.
Spotify also arrives with the clear goal of gaining ground against music piracy in the Mexican market, where 6,000 songs are downloaded illegally every year, according to figures from the Mexican Association of Phonogram Producers (Amprofon).
The Swedish service hopes to accomplish this with a catalog of 22 million songs that grows by 22,000 daily, allowing it to compete head to head with iTunes, which has been in Mexico since August 2009 and offers the largest catalog of music for sale.
“We have an offer and a product that people love, and we believe that our main competitor is piracy,” said Bahigh Acuña Shaadi, head of New Markets at Spotify and Director of its Mexico office, which is the first Latin American country the company will have operations in.
Spotify offers Mexican consumers an on-demand music service that can be played online from any device with an Internet connection and comes with three service options:
• Free: Unlimited access to music through a computer, with the service monetized through advertising
• Unlimited: Ad-free content at a monthly subscription of 49 pesos
• Premium: Unlimited access to Spotify’s catalog from any desktop computer or mobile device for 99 pesos a month. It also allows downloading playlists to a mobile device without an internet connection.
Spotify also offers a social media experience that allows users to follow artists, celebrities and friends, and share their favorite songs or playlists.
Mexican market facts:
• Only 36% of Mexicans use the Internet.
• There are 26 companies in the digital music business.
• In 2012, the sector generated revenues of 1,058 million pesos—an increase of 35% over 2011, according to Amprofon.
• Mexico’s low fixed broadband penetration — only 11.37% of households have broadband access and mobile broadband access is 9.62% per inhabitant — represents a challenge for digital content platforms.
• Arrived in Mexico as the 27th company in the digital music business.
• Mexico is its gateway to Latin America.
• It is the second most important company in Europe.
• Has a presence in 27 countries.
• 20% of users subscribe to its Premium service.
• Has 24 million active users worldwide, of which six million are paid subscribers.
• In 2013, it will pay record companies more than $500 million in royalties for playing their artists’ songs.
• Employs over 700 people worldwide and is valued at $4 billion dollars.
The Coca-Cola ‘spark’
Just after its arrival in Mexico, Spotify inked an exclusive advertising deal with Coca-Cola to run the soft drink maker’s ads — as the sole advertiser on the service — through May 1st.
More options for digital advertising could open up after that date.
Spotify’s man in Mexico
Bahigh Acuña Shaadi, head of New Markets, has helmed the Mexico project since January. Prior to that, he oversaw teams at companies such as Monster (job portal), Pepsico and Publicis. He is confident that the team he will be working with in Mexico will be mainly composed of sales executives and social media campaign coordinators.