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Coca-Cola and Spotify Partner in Global Deal

Soft-Drink Giant, Music-Streaming Service Team Up to Reach Teens Worldwide

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Just months after 4-year-old music startup Spotify partnered with Facebook to goose new-user signups and reach new audiences, it's turning to a behemoth of an entirely other type: Coca-Cola.

Spotify and the Coca-Cola Co.have forged a strategic partnership to promote the music-streaming service as it launches in new countries. In turn, Coca-Cola will feature Spotify in a campaign as the beverage giant looks to double revenue by 2020.

Spotify will be the centerpiece of Coca-Cola's "Year of Music" campaign in 2013, said Joe Belliotti, director-global entertainment marketing at the soft-drink marketer. Music has been central to Coca-Cola's efforts to reach teens, a demographic group projected to represent one-third of the global population by 2020. The U.S., China, India, Indonesia, Nigeria and Pakistan are expected to have half of the teen-age population by then.

As part of the agreement, Coca-Cola has committed to promote Spotify in paid media and through its massive distribution network. Spotify is now available in the U.S. and a dozen European countries and more than 10 million users stream its library of 16 million songs accompanied by advertising. Another 3 million subscribers pay for ad-free access. While no details have been finalized, Coca-Cola says Spotify promotions could include access codes on packaging, TV or billboard advertising or in McDonald's restaurants as the music service launches in new countries later this year and into 2013.

The partnership will entail human-resources and marketing investment, Mr. Belliotti said. "We'll use our scale and our campaigns to help expand Spotify's brand, too," he said.

"One of our big challenges is : How do we reach people? How do we have our voice heard?" said Daniel Ek, founder-CEO of Spotify. "We want music to be like water, everywhere. But when you think about it, we want music to be like Coke, which really is everywhere."

Daniel Ek, CEO of Spotify, opens Wednesday's programming with a presentation at the Ad Age Digital Conference in New York.
Daniel Ek, CEO of Spotify, opens Wednesday's programming with a presentation at the Ad Age Digital Conference in New York. Credit: Patrick Butler

In the near term, Coca-Cola plans to integrate Spotify into its Facebook timeline, which, as one of the biggest brands on the social network, has more than 40 million followers. Spotify is already heavily integrated into Facebook; the two companies partnered in September. For the Olympics, Coca-Cola will also launch an application on Spotify to surface new music for users. Last week, Spotify launched similar brand apps for marketers such as AT&T, McDonald's and Intel.

Both the brand apps and the Coke partnership demonstrate Spotify's commitment to adland as it looks to advertisers to help underwrite the substantial costs of licensing music from record labels.While the brand apps are free for marketers to develop, some, such as Intel, have said they'll look to drive traffic through paid advertising on Spotify.

"We're trying to get [Coke] to invest more into creating the next generation of branded advertising," Mr. Ek said. "I don't even like the word 'advertising,' I want to get rid of that : The next generation of brand experience is content."

"To bring people free music while being sustainable so artists can make a living, someone has to pay for it," he said.

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