Mar 13, 2020
In the 21st century, we have developed a new lexicon of ‘digital disruption’. Any company that innovates is ‘changing the game’, new ideas are ‘revolutionary’, and most of all, start-ups that make a dent in the market must be ‘disruptive’.
In truth, few companies are worthy of these monikers. To disrupt an industry means to deliver on consumer desires with a business model that displaces the incumbents, creating an almost unfair competitive advantage.
Spotify, the digital audio streaming service, meets these criteria. At a time when people were listening to more music than ever, but record labels were struggling financially, Spotify decided to lean into those consumer trends rather than trying to counteract them.
People simply didn’t want to buy individual albums or songs any more. Many were willing to use music piracy services to access the content on their terms, rather than continue paying for CD’s.
Spotify offered a freemium, all-you-can-eat (or, listen) model, mobile access, personalized playlists, and even music downloads to listen to offline. Free users hear ads between songs, while paid subscribers can access over 50 million titles, ad-free.
Artists are paid commissions based on the popularity of their songs, which is in theory a democratic way of distributing the subscription and advertiser revenues. This also extends the lifespan of their earning potential, as streaming is a never-ending process. An album is bought once, but its songs are listened to for years. The Spotify model rewards this repeat listening.
Today, Spotify has over 250 million users, including over 100 million paid subscribers across more than 70 countries. For many, the brand name Spotify is synonymous with music streaming. In fact, if you type ‘playlist.new’ into the Google Chrome browser address bar, it will take you to the Spotify website.
In 2020, Spotify will continue its push into podcast publishing and will open up a new suite of audio tools for advertisers. The future looks bright green, indeed.
It’s not all glory, of course. Any company that provides inventive new answers to age-old questions will always create a new set of questions in its wake. Spotify is not the only company vying to create these solutions and its competitors include Google, Amazon, and Apple.
This is the story of a genuinely disruptive business that has, better than just about anyone else, delivered on the notion that data and creativity are mutually reinforcing concepts.
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