🎶 How Spotify built a $37B empire

🎶 How Spotify Built a $37B Empire

There are 3 major music streaming platforms:

  1. Spotify

  2. Apple Music

  3. Amazon Music

Apple Music has a pre-downloaded app for every iPhone sold.

Amazon Music had over 50% market share in 2008.

Yet, if you combine every Apple and Amazon music user, Spotify has them beat by almost 400 million users…

How did this happen?

How did Spotify beat two trillion-dollar companies and outsmart the Apple ecosystem? 

Great question.

Here’s what we got for ya:

  • 📈 Personalization At Scale

  • 🎁 The Perfect Pitch

  • 🥷 The Art Of Stealing Attention

Read Time: 4 min 41 sec

📈 Personalization At Scale

By 2010, most people could download any song they wanted via Amazon Music (at the time they had a 30% market share).

So Spotify knew they’d have to offer more than just a music streaming platform.

Spotify saw Facebook and Instagram personalize the feed of each user based on their interest. So, they did the same for music.

Here’s how:

#1 - Discover Weekly 

Spotify’s first shot at personalization was “Discover Weekly”.

It was a new weekly playlist with 30 new songs that Spotify recommends based on your music tastes.

 In less than 1 year, Discover Weekly alone brought in over 40M users.

#2 - Spotify’s merch and ticket stores. 

When the platform sees you listen to an artist multiple times, it’ll push you to the artist’s merch and show tickets.

Sometimes if you have a high enough listening time, you can get discounts on concerts for those artists!

#3 - Playlists

Spotify creates tons of playlists for users…

  • Mood playlists - Playlists for specific moods

  • Smart Shuffle - Spotify will add new songs to your playlist while you listen

  • Time Capsule - The top 30 nostalgic tracks from your teens and twenties.

All of which encourage you to do one thing - share it.

Playlists not only personalize every Spotify account, but they are a great growth loop to bring in new users without seeming pushy or ‘corporate.’

So not only is the experience of using Spotify personal but so is the discovery.

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🎁 The Perfect Pitch

Every year, Spotify gives every user what’s called a “Spotify Wrapped”

It’s a personalized report of the user’s listening habits.

Each Spotify Wrapped does 3 things:

  1. Tallies up how many minutes you used Spotify that year

  2. Lists your top songs/ artists

  3. Gives you a ‘name’ for the type of listener you are (mine was ‘Vampire’??)

The original goal was to show users how valuable Spotify is to listeners.

I listened to Spotify for 43,000 minutes this year (that’s 30 days!).

This is a great marketing tactic.

Not only does it prove that $11/ month is a low price for what Spotify offers, but it gives users info on the one thing they care about most…

Themselves.

When Apple and Amazon Music users saw this, they got a major case of FOMO.

This led to a 5% increase in market share in less than 7 days.

🥷 The Art Of Stealing Attention

Spotify got one thing right early on…

No one cares about Spotify. They care about the creators on Spotify.

Like we talked about last week in “How To Build A Luxury Brand”, one of the best ways to grow as a small company is to steal the attention of others.

But Spotify takes this one step further.

Spotify leverages access to those who own attention.

Want to listen to the new Joe Rogan episode? Spotify.

Want to hear J. Cole’s new song that has a limited release? Spotify.

Right now, 90% of Spotify’s revenue comes from subscriptions. The other 10% is from ads.

If you ask me, it won’t be long before stores start running Spotify ads like they do on Facebook and Instagram.

Think about how much data Spotify has…people you listen to, who influences you, your attention span, what you’re interested in, etc.

It’s an untapped gold mine.

Plus, the CCO of Spotify released this statement last year in an interview:

“90% of our monetization is on the subscription side. But 10% is on the ad side, and we do think that there is a real growth opportunity for us in the ad space, particularly with podcasts.”

- Dawn Ostroff, Chief Content Officer, Spotify.

That’s it for today!

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