7 Reasons Spotify Beat Rhapsody/Napster and Dominates the Music Streaming Industry
1. Superior user experience
Spotify’s app is dead simple. The app design centers around “playlists,” an idea that is easily understood
Spotify provides instant music, high-quality audio, and no need to download
Spotify was hell-bent on making it feel like you had all the world’s music on your hard drive
Spotify integrates with all devices: desktops and phones are apparent, but you can find support for Spotify in Chromecast, Google Home, Alexa, Playstation, Apple Watch, now cars, etc.
Spotify continued to invest in more engineering resources, the development of its algorithms, and the infrastructure required to deploy similar internal projects. This made the Spotify experience stickier and more personal to each individual user
By making Spotify an intuitive, rewarding, and engaging experience, Spotify has capitalized on opportunities its competitors missed by combining the thrill of discovery, the excitement of sharing music with friends, and a vast catalog of every kind of music — all of which make Spotify a truly best-in-class product and a unique success story
“The only way to compete with free music was to make the experience of using Spotify so good that users would happily pay $10 per month even though they could easily download torrents of their favorite music for free”
2. Focus on product
Early years were spent focusing intently on one thing: the race to reach product-market fit
Spotify chose to focus on developing a solid product and growing slowly by restricting how many invites users could give away to their friends. This allowed Spotify to maintain its focus on product development; plan for and manage steady, gradual user growth; and create an air of exclusivity around the product itself.
They weren’t settling for the good enough; they were going for the best. They were looking for the best people, the best talent, and were not easily impressed by the regular VC giants
Spotify invested much of its early-round funding ($85M from its Series A and B) into hiring top engineering talent
A major difference between Spotify and Rhapsody/Napster was Spotify’s reluctance to do custom development for partners, instead keeping intensely focused on its core product
3. Free tier
Rhapsody/Napster didn’t have a free their
Try Spotify for free and get a free month of premium
To grow its user base, Spotify turned its attention back to its primary engine of subscriber growth, its freemium product. Spotify made the freemium product even better by doubling down on developing new product features and making the Spotify experience even more engaging
4. Simple pricing
A pricing model everyone understands
They have two plans: a free and a premium plan
Free tier w/ some ads and restrictions, $10/mo for premium
5. Data-powered personalized playlists
They used AI/ML models to make songs and playlist recommendations that are useful
Discover Weekly, Fresh Finds, and Release Radar
Discover Weekly attracted 40M new users to the service, and more than 5B tracks have been streamed through the playlist feature
Spotify created two regular, weekly events that Spotify users not only enjoy but also actively look forward to every Monday and Friday
By bookending the beginning and the end of the week with new playlists, tracks, and artists, Spotify has effectively made itself an indispensable part of music fans’ entire week.
People love their end of the year stats of Spotify Wrapped
6. Partnerships
The Big Four record labels became Spotify’s biggest shareholders, receiving almost one-fifth of Spotify’s stock for just 100,000 Swedish krona (approx. $112,000). It’s difficult to overstate just how pivotal this initial agreement between Spotify and the Big Four labels was
A big move was officially integrating with Facebook, becoming the official music player of the social network
The integration with Facebook netted Spotify 1M new Facebook-connected users in just four days
Spotify is integrated with the music-discovery Shazam so every time you use Shazam to figure out who’s singing a particular tune, it populates a playlist with those songs
7. Clear vision
In February 2010, Ek told the Daily Telegraph, “The music industry is currently worth $17 billion; it’s going to be $40 billion or $50 billion soon. There will only be four or five players left in a few years. If that’s the case, we will end up with a company worth tens of billions.”
Spotify’s ambition to make Spotify “like water” as Ek was fond of saying, and sees Spotify integrated into everything from Starbucks to Facebook Messenger
Resources
Spotify — Most innovative companies — Fast Company
How Spotify Built a $20 Billion Business by Changing How People Listen to Music
The definitive timeline of Spotify’s critic-defying journey to rule music
Why Is Spotify so Successful (Or Lessons From a $46 Billion Business)
How Spotify became the cornerstone of music streaming
From Rhapsody to Napster: How this pioneering music service coulda been Spotify — and why it isn’t
#SharedFromTwos ✌️
