Having spent many successful years at AOL, Bloomberg and Sony Music Entertainment, Mark Uttley certainly had the perfect CV for his role as vice-president, consumer insights, at music streaming service Spotify – which boasts more than 75 million active users, 20 million of whom subscribe to its paid-for service.

“Consumer insights clarify who the audience is and my team is focused on understanding trends that help us grow,” says Uttley, who credits his boss – chief marketing officer Seth Farbman, previously at Gap – with developing a “world-class” marketing function at the company.

“We are now more brand- and consumer-led,” he explains, while admitting that marketing “only began in earnest” at Spotify after Farbman’s arrival last year.

As his team grows – it will almost triple in size this year, to around 27 – the insights function is maturing, and Uttley believes “it will be world-class once we have hired the team we are putting in place”.

The end goal of this hiring spree is to create a blended team offering qualitative and quantitative expertise, as well as skills in marketing and big data analytics. B2B brand partnerships and media sales insights have also been brought into Uttley’s remit.

“This enables us to get the best overall value from our insights work and tell a much more coherent story about our audience to both internal and external audiences,” he explains.

Another area of increased focus for the team is social media analytics. “We have two main tools for this,” Uttley says: “Affinio, which is an amazing social segmentation tool that helps us understand the audiences we are targeting online; and Pulsar, which helps us monitor social buzz online.

Both of them will help us to take our social media marketing to the next level, which is a key objective.”

Affinio helps Spotify identify very different ‘tribes’ of consumers in terms of their tastes and interests. The tool allows the team to look through the “lenses” of particular groups and so avoid the mistake of trying to be all things to all people.

The experience Uttley gained delivering insights for advertising products at Bloomberg has proved useful in his current role. For example, at the media owner he helped to set up a multi-platform, custom [advertising] content deal for Visa, specifically targeting CFOs. “There is a major role for consumer insight helping to inform deals like this. I am bringing a lot of this thinking to Spotify,” he says.

Mood state

Uttley believes Spotify is well placed to help its external brand partners to target consumers via non-traditional demographics such as moods or moments. According to Jon Puleston, vice-president of innovation at Lightspeed GMI, who has worked with Uttley for many years, the ways in which music listening can reflect mood state and personality is very powerful for insight purposes.

Puleston points to the potential in fusing music-based segmentations into wider offerings for media-planning purposes. “You can start thinking about how music fits into people’s lives and build segmentation models linked to personality type,” he says.

“There are lots of unexplored areas and what’s really interesting is looking at how to fuse more data points together.”

That said, when Uttley looks back over his career, to his time at Sony Music Entertainment – where he started a programme of global segmentation – he admits that the music industry is “not the most innovative” [in data terms]. But he credits agency Crowd DNA with having done some great work for his team while at the label.

Together they created an insight system to help the business share audience understanding among key stakeholders, using a website and supporting social media assets to capture the stories around segments through words, pictures and video. The aim was for the audience to be kept top of mind at all points during the planning and execution process.

“Sony Music was a very intuition-focused organisation that was initially resistant to research and data,” explains Uttley. “The segmentation we rolled out gradually made some of the most resistant people much more accepting of insights and much bigger users of it.” He is passionate about this aspect of his job and the need for storytelling within market research. “Data-driven doesn’t necessarily mean insights-driven,” he adds. “You need a clear narrative.”

Consequently, he thinks investment in design, copywriting and distribution is crucial for an effective insights function. But he is not one to rely too much on agencies: “We mostly do it in-house. Either you become a glorified purchasing function or you really go to the next level in terms of your understanding, which is what we want to do here.”

Uttley’s affinity with storytelling is entrenched, and goes back to his days as an English literature student at the University of Edinburgh, when he initially had thoughts of a career in journalism: “The central principles of telling a story are integral to what I do.”

The biggest challenge he is facing at Spotify, he says, is “growing pains”. “But we have insane optimism and we work hard. We avoid data deluge and silos, and we are focused on getting areas of the organisation to talk.” He urges the industry to move beyond talk of ‘big data’, adding: “It’s a boring conversation. Market research is a tool, not a raison d’être. Let’s be the storytellers of the digital age.”

Growing pains aside, Spotify has also encountered resistance from high-profile and influential stars. Singer-songwriter Taylor Swift removed all of her material from the service as a way of fighting back against what many artists believe is a very low rate of payment for musicians each time a track is streamed.

Fan insights

But others believe this resistance to the economics of the music-streaming model is ill-founded. The streaming market reached £250m last year and is still growing fast, according to Kim Bayley, chief executive of the Entertainment Retailers Association, who points out that 70% goes back to the labels and artists. She predicts that, “long term, it will be beneficial for the artists”.

Uttley believes the answer is to better serve the artists – and, to be seen doing so. “We’re only at the beginning of what we can do here,” he admits. “We’ve done some experiments to help plan and sell out tours, using our data. This was a muscle we didn’t know how to stretch before.” In beta just before Christmas, for instance, was an artist dashboard called Spotify Fan Insights, which allows musicians to understand their audiences better.

Spotify has also made a number of acquisitions to bolster its data science skills. Last summer it bought data innovation and analytics firm Seed Scientific, which counted Audi, Unilever and the United Nations among its clients. Its CEO, Adam Bly, is now vice-president, analytics, at Spotify and is creating a data dashboard to allow real-time decision-making across the organisation.

“We are doing a lot to tailor to time of day or mood,” says Uttley – adding that he would ‘love’ to integrate weather into the algorithms as Spotify seeks to deliver ever deeper and more personalised communications.

Running to the beat

Another recent acquisition was that of music intelligence platform Echonest, which has led to innovations such as the ability to auto-generate music according to the speed of a runner. “Echonest is threaded into every playlist now,” says Uttley. The product insights team spent a great deal of time understanding runners when creating the product, in an attempt to deliver the ideal music and running experience.

“Music to match your running speed is all about understanding mindsets and mood states again,” says GMI’s Puleston, “It’s useful for all sorts of purposes, such as how you communicate your advertising message to someone. If you’re in the bath, you won’t be so interested in an aggressive Carphone Warehouse deal. Mood states are very interesting to media planners. Spotify could potentially provide access to this.”

But using data, whether or not it’s to help with mood states to better segment, is not without its issues. Spotify updated its privacy policy last year, making the collection of personal data potentially far broader, which led to quite a few negative headlines. Uttley agrees that the decision could have been communicated better, but is pragmatic about the need for data: “We were very apologetic – and, overall, if we didn’t collect data, we couldn’t personalise. It’s all optional.”

All Spotify’s playlists are fuelled by data – whether it’s a playlist that responds to your running speed, a party playlist that a user can vary according to the number of people who turn up, or simply the recommendations that Spotify provides.

But what about the perennial challenge of older demographics who are still in the habit of buying CDs – and the growing popularity of vinyl as a counter to the increase in streaming?

“My big thing is that we need a better curation experience,” argues Uttley. “We can co-exist with vinyl. I think it’s great. It offers a better sound than MP3. We’d be kidding ourselves if we thought the only way music can be consumed is on our platform.”

His personal opinion is that consumers “aggregate” their ideal music model. He talks of “convergent” music experiences involving streaming, video and radio.

Gennaro Castaldo, communications head at music industry body the BPI, says UK recorded-music consumption rose by nearly 4% last year, while the retail value of the music consumed also grew for the first time in many years.

“We’re seeing consumption become more multi-channel,” says Castaldo. “It might sound slightly counterintuitive, but a recent softening in the decline of CD sales and the vibrant growth in the vinyl market point to a possible complementary relationship between streaming and music on physical formats.

“There’s also been research that suggests a growing number of consumers stream for daily music discovery and access, but when they come across a recording they particularly like, or one by a favoured artist, they may be motivated to purchase.

“So streaming, which you could describe as a global jukebox in the sky, appears to be leaving space for other formats.”

Mature market

The online audio sector is growing and already represents about 5% of digital advertising in the US, which is a more mature market, according to Stuart Mays, director of commercial strategy at Global Radio.

Uttley says that a global study Spotify is rolling out with TNS looks set to prove the incremental reach that streaming services can offer alongside traditional radio, and his attention is also focused on moving away from its traditional “trendsetting millennials” user base, and identifying “follower” groups.

“We use a psychographic approach called ‘The Cone’,” he says, “which segments consumers into early adopters versus more mainstream groups and has a generational overlay.

“Spotify has done a great job of penetrating early adopter millennials, especially 18- to 24-year-olds, and we are now aiming for older, slightly more mainstream, segments.”

Going forward, Spotify is looking to become a “wider entertainment proposition, with music at the core” – and, to that end, it has recently added podcast and video functionality.

“Our goal is to offer the right content for every moment,” Uttley says, “be it a video for your commute, a podcast for a road trip, or music while you are relaxing at home.”