Spotify’s voice platform problems

In addition to the struggle of finding a path to profitability, Spotify, the pioneer of music streaming (and a company which I have been following since its closed beta launch in Sweden in 2007), has two new problems, one right now and the other in the mid to long term.

The near-term problem is Apple’s smart speaker HomePod which will go on sale in the US, UK and Australia this Friday, with additional markets to follow in the upcoming months.

HomePod will only play well with Apple’s own music streaming service, Apple Music. Other streaming apps can be used via AirPlay, but HomePod owners won’t be able to control playback through their voice.

In the US, Apple Music is already said to be gaining subscribers at a higher rate than Spotify. For every new owner of an HomePod, Spotify will be a worse choice than Apple Music. Existing Spotify subscribers in the US who decide to purchase an HomePod will have a big incentive to switch, and Apple makes it easy by offering a free trial for Apple Music. Continue Reading

Tidal means that artists finally acknowledge streaming as the future of music consumption

Tidal

Last week’s celebrity-soaked presentation of a new music streaming service called Tidal, whose main initiator is the rap star Jay-Z, created lots of headlines. Many of them were not very sympathetic (like here, here, here or here). If a couple of millionaires show up together on stage in an easily misunderstood attempt to convince streaming subscribers to pay more money, it is like asking to be criticised and mocked about.

But aside from the understandable public questioning of what Jay-Z and his fellow music superstars are trying to accomplish here, there is another, more significant angle to having a bunch of big name artists starting a service such as Tidal: The acknowledgement that streaming is the future of music consumption. Continue Reading

After years of struggle, 2015 looks to become big for Spotify

When Spotify released its user numbers in the middle of November, I wrote a piece on netzwertig.com (in German) stating that the on-demand music service finally seemed to have initiated some kind of exponential growth. In order to illustrate my point, I created a graph visualizing the growth in users and paying subscribers over the past years.

My conclusion was certainly quite early, as the curve only indicated a possible trend of exponential growth. But I felt it was a bet I could afford. Fortunately, I do not need to revoke my statement: Only 2 months later, Spotify announced new numbers: 60 million users in total, of whom 15 million are paying. In November, the numbers were 50 million and 12.5 million.

Correspondingly I updated my chart, which now clearly shows an accelerating growth (for users reading via RSS the embedded Google sheet might not be shown).

Quartz realized that it was time for a visualization of the Spotify user growth as well. The site also correctly points out that since Taylor Swift withdrew her entire catalog from Spotify in November, the numbers increased by 20 %. That suggests that the massive media attention that was generated by Swift’s decision actually might have helped Spotify to acquire more users.

For a couple of years, Spotify, the pioneer of legal on demand streaming, had something of a growth-problem. Now, for the first time ever, the curve points at the right direction. Unlike some other online industries where a niche can be lucrative, the on-demand music business with its significant licensing costs and complex stake holder structure can only work if there is massive scale.

We still need to wait and see whether the current trend continues. If it does, 2015 will become the big year of Spotify (and, if the market allows for, the year of a Spotify IPO).