Spotify’s Bold New Transition from Streaming Music Service to Music Platform

Spotify today gave an update on the year to date and announced a host of new features.

5 Million Paying Subscribers

As expected Spotify has managed to hit the 5 million paying subscriber mark which is a fantastic achievement, as is the 1 million US paying subs also announced.  That translates to 1 million new paying subscribers in just 3 months.  Back in May I predicted that Spotify would hit 8 million paying subscriber in May 2013.  It looks like that prediction is going to be in the right ball park.  Spotify’s official active user count is now 20 million, which interestingly is much closer to the Facebook reported 24 million – those numbers have been very far apart for the last 9 months or so.  Which indicates that Spotify’s marketing funnel has got bigger as its profile in the US has grown.  i.e. more people are trying out the free service. (See the graphic at the bottom of the page for a summary of Spotify’s numbers).

Spotify also announced it has paid out $500 million to rights owners, which is impressive, but to keep a sense of perspective is about 2% of all digital music service money paid to record labels globally since 2009 when Spotify burst onto the scene.

A Bold New User Experience

But of more interest, to me at least, was a slew of new features that collectively transform the Spotify experience.  Spotify has made a bold UI transformation from a list-based approach to a rich visual experience with modules of music content (which visually looks like a cross between Rdio and Pinterest).  These include music, artwork, bio information, reviews from Pitchfork, Songkick gig information, recommendations based on your behaviour.  In doing this, Spotify has made a subtle but powerful transition from streaming music player to immersive music platform.

Spotify Thinks the Discovery Question Does Need Answering

Spotify also announced, as TechCrunch had correctly predicted, a new social discovery tool called Follow, whereby users can follow people’s whose music tastes they want to keep up with. People can follow friends or music influencers such as artists, music bloggers, music journos etc. pretty much in the way they would on Twitter, but here they get sent playlists of music to listen to instantly rather than 140 characters of static text.

Spotify are trying to answer the big discovery question which has so far gone largely unanswered, despite plenty of well-intentioned efforts to come up with a solution.   Discovery has been the centre of some pretty heated debate of late – as this and this post show – but whether or not it gets fixed in the wider music industry it is a huge issue for streaming music services.  What is the point of having all the music in the world at your fingertips if a search bar is all you have to find your way around.

Good music discovery happens in two main ways:

  1. Someone who’s reputation we trust (DJ, cool friend, family) makes a recommendation
  2. We serendipitously fall upon a piece of music that we love

Why Discovery Matters So Much to Streaming Services

Unlimited music services face the paradox of their being so much choice that there is in effect no choice at all.  People need a way to navigate through immensity of the music world. Spotify’s Follow function is a way of addressing this issue. It’s a smart way to do it, because good music discovery isn’t ‘we’ve seen you like this song, so we think you’ll like these three songs too’.  It’s much subtler than that.  Following people who have great music taste can be exactly that sort of subtle discovery.  But this isn’t a new idea.  Beyond Oblivion had built their entire service around the concept of following influencers (and they had a pretty cool atom-like visual navigation to let you get from influencer to influencer too).  Of course Beyond never got to market, but Spotify have picked up the idea and run with it. Rdio also have the feature.  In fact if I were Rdio I’d be feeling a little as if some of my clothes had been stolen.

Spotify’s Follow feature gets really interesting in an artist context.  If an artist posts a music playlist to his followers it gets delivered straight into their music collections.  A great way to launch a new album direct to your fans.  Though it does raise some interesting questions about whether this will increase or decrease album sales?  Does getting your favourite artists’ latest album delivered straight into your Spotify player sate your appetite straight away or simply whet it?

Spotify’s Follow feature is not the answer to the discovery question, but it is certainly one important step in the right direction.  In fact there won’t be a single answer to discovery, because we all like to discover music in different ways.  Some of us want to dive in and have an immersive experience, others want something music less. Some of us want both, but at different times.  And Spotify recognize that by offering multiple other new ways of recommending music, ranging from recommendations based upon user behaviour, collaborative thinking and context such as the age of the user.

Spotify is Now A Music Platform

This set of new features is the most important change in Spotify’s user experience, period.  It transforms Spotify from an excel spread-sheet streaming app into an immersive, multimedia, context rich music experience platform and app ecosystem.  Back in November 2011 I suggested that with the launch of its API platform that Spotify was taking the first step towards making music the API, and towards transforming Spotify into a music platform.  Now just over one year on we can see the fruits of that labour.

Much of what Spotify has done isn’t unique, but they have executed it in a manner akin to Apple in its digital music prime.  Execution is everything.  Spotify has just set the digital music experience standard for other music services to aspire to.

Spotify infographic dec 2012

Spotify Artist Apps and the Road to Relevance

Spotify yesterday announced the launch of Artist apps for four artists, namely Quincy Jones, Tiësto, Rancid and Disturbed.  This is another important step in Spotify’s music strategy, and one that is more important than may first appear.

Spotify’s App and API strategy (of which I have gone on record as being something of a fan of) may not have had anywhere near as much momentum as hoped, but it is making solid progress and the artist apps will give it a much needed boost.  The artist apps though are part of a bigger bid for relevance and mass market appeal.

When there is So Much Choice that there is No Choice At All

One major problem with streaming music services lies in the fact they provide unlimited access to all the music in the world: there is so much choice that there is no choice at all.  Though Spotify has started work on improving its discovery story – much of it through 3rd party apps – discovery remains problematic.  Another problem in streaming services the artist’s brand is inherently subjugated to the service’s brand: consumers pay for access to all the music, not for an artist or two.  In the analogue era the artist brand dominated with singles and artist albums.  In the age of the playlist, a la carte cherry picking and unlimited on-demand access, the artist brand often struggles for voice in a sea of discovery noise and clutter. Artist apps though kill the two proverbial birds with the same stone: simultaneously enhancing the artist brand and music discovery.

The Need for the Tangible

A key dynamic of the ownership-to-access transition has been the difficulty of communicating a sense of permanence and tangibility in music service experiences. Playlists may be one of the early defining characteristics of the consumption-era and may deliver great user benefits, but the very fact that they are so easy to create and to delete contributes both to a sense of transience and of having little monetary value.  Thus playlists do not effectively communicate enough tangible value over the CD, which is an illustration of why the majority of digital consumers still buy CDs.  For streaming services – and indeed digital as a whole – to come of age and to appeal to the mass market, they need to develop features that go beyond the excel spreadsheet-music-service approach.  This doesn’t mean a need to deliver ownership but instead to meet some of the fundamental consumer needs and tangibility that physical music experiences deliver.

Spotify Artist Apps Are A Great First Step On a

Artist Apps are a Solid First Step

Spotify artist apps are a step in this direction, delivering an audio visual and curated artist experience.  It is fair to say that the current iteration of artist apps are far from the finished article, the first step on the journey, but at least that journey has been started.  The digital music marketplace more broadly needs to rise to the challenge of ensuring that artist specific experiences like these become a standard feature of digital music experiences.  Spotify artist apps , when set alongside the theoretical music product prototype I sketched out in my ‘Music Format Bill of Rights’ report (see figure) and viewed in the context of the longer term music product and format evolution, are a glimpse into the future.  Spotify needs to kick on from here with full integration of multimedia assets such as video and games, and of course it needs many many more artists, long before which it will also need to have hit upon an elegant means of filing and navigating the apps.  But for now, Spotify artist apps are welcome early step on the road to mass market relevance and digital music product tangibility.