A Critical Look at Spotify

By Tom Dougherty

Spotify ushers in a new form of brand

At Stealing Share, we have a deep appreciation for companies seeking to be different and better than their competition. Regardless of the category or its size, businesses always have the capacity to be unique. They have the ability to fully embrace their customers. And, perhaps over time, their particular customers may come to covet them (we do hope) thus forming a cemented brand. 

We’ve chosen to take a critical look at the streaming music resource, Spotify. We’ve been very impressed with Spotify as they seem to be taking a wise approach to the streaming music experience. Will they be iTunes killers? Well, we’re not taking things quite that far yet. But we do believe with the right branding, Spotify could become the second best streaming music site on the web and maybe one day, the first. 

What is The Spotify Brand?

Spotify branding is tied to its future
Spotify is in a highly competitive category

Much like streaming music sites like Rhapsody, Napster or Pandora, the Swedish born “Spotify is a DRM-based music streaming service offering streaming of selected music from a range of major and independent record labels, including Sony, EMI, Warner Music Group, and Universal.”

Just recently released in the United Stares, The Spotify brand has an amazing wealth of music that users can access through a plethora of technological vehicles. For example, you can easily log into the Spotify system from your computer and use their internet-based interface, which is reminiscent to iTunes (you can even upload the entirety of your music catalog to the Spotify interface, thus enabling you to completely forgo iTunes, should you wish. Or, if you desire to access Spotify from a phone or tablet, Spotify has apps that can be downloaded so you can access the service anywhere. 

Spotify needs to remain current and involved
Spotify plays a strategic game

As stated in the company’s description, Spotify branding works hand-in-hand with both a diverse and large group of indispensable music labels, offering users a sizable database to choose from. Unlike the trendsetter iTunes, a music store where one has to pay $.99 to own a song or $7.99 and up per album, Spotify offers Premium monthly memberships of only ten dollars. With this membership-based program, users can stream any and as many songs as they wish. The only downside is these songs and albums are not yours to keep. Spotify is more like a library, where as long as you pay your membership, you can keep your books for as long as you like. Additionally, full albums and user created playlists can be saved and accessed at anytime. What’s more, music can be streamed at a high bit-rate, giving users a truly vivid sonic experience. 

Spotify, at a quick glance, seems more in tune to user preferences than the other music-streaming giant, Pandora. Pandora, for those readers not aware, is a free, streaming, radio service. With Pandora, one can log on and select an artist or song you wish to hear. Once established, Pandora selects songs from that chosen artist, as well as other similar artists (as specifically selected and categorized by Pandora). Spotify, on the other hand, gives users complete and exacting choice. 

With Spotify, users can specifically select a song or artist they wish to hear, and that very song or artist will be played, not an assortment of similar artists. Pandora is more of a crapshoot, while Spotify gives you immediate gratification.  This then is very beneficial for the avid music listener.

The Genesis of Spotify

A company with, as we see it, such a smart approach to the music experience does not simply bloom and flower overnight. As stated, Spotify was born overseas in Sweden, where it was launched in 2008. 

As has been reported from the Spotify Blog:

The Spotify application was launched for public access on 7 October 2008. While free accounts still remained available by invitation only in order to manage the growth rate of the service, the launch meant that paid subscriptions were opened to everyone (We’ve only just begun! Spotify AB blog. 7 October 2008.)

The first step towards offering free accounts to the public without an invitation was taken on 10 February 2009, when Spotify opened for free registration in the UK (Spotify now available to everyone in the UK. Spotify blog. 10 February 2009). 

Due to a surge in registrations following the release of the Spotify mobile service, Spotify closed its open registrations in the UK for part of 2009, and went back to an invitation-only policy.(https://www.spotify.com/blog/archives/2009/09/10/back-to-invites-for-a-while-in-the-uk/). 

Following a series of promising years where new investors, subscription programs and awards for the program had been won, Spotify launched their US service in July, 2011. At this juncture, the company was already assessed at one billion dollars. And with the seemingly strong interest in the company, that revenue may continue to rise. 

What exactly is Spotify’s Brand? 

Whenever analyzing a brand, we must first consider “who” the customer believes they are when using that specific product. It’s also wise to contemplate how we perceive that same customer wishes to be perceived by others when using that aforementioned product. That said; let’s apply this specific branding scenario to Spotify.

As onlookers, we believe people who use Spotify are serious about music — and they believe themselves to be serious music listeners. Adding to this, these users are looking for a better alternative to iTunes and I speculate, they believe they have found that alternative with Spotify.

Yet, why would these users think that? Why would Spotify possibly be a better music answer than iTunes? First, using Spotify as a Premium user is ultimately cheaper, $10 a month. This is very cheap for the serious music listener. With this small monthly investment, the music aficionado has immediate access to nearly any song they wish (minus the Beatles and a handful of others) at a high bit rate, 320 kbps, in fact. This, as the Spotify website details is, “some high fidelity.” See, Spotify recognizes that the music lover (or, the music “snob”) cares about that high fidelity and it is a worthy selling point. Moreover, Spotify boasts exclusive content like early album releases to Premium members. Which again, to the music purist, the full album listener, relishes in. 

In a nutshell, Spotify’s brand is about convenience and premium music for the serious music listener. 

What then, is Spotify doing well?

Spotify seems to understand that they are the web and app based option for music enthusiasts. It’s clear that this message is resonating with users too (Spotify now reports being assessed at one billion dollars). 

When it was released in North America, Spotify did something interesting, they made their content available only to invited users. By doing this, Spotify created instant intrigue amongst potential users as potential users desired to be a part of the Spotify network.  This was a classic case of supply and demand, thus by limiting supply, the initial demand for Spotify seemed immense. 

Additionally, Spotify has created a simple to navigate interface on the web and also as a downloadable app for phones and tablets. On each, users can easily import their pre purchased musical MP3 catalog. Users can also search through an overabundance of albums and songs, and save selected songs and albums as playlists that can be accessed at anytime. 

For those that care about simplicity, these attributes are highly favorable. 

What is Spotify doing poorly?

It’s hard to pick apart a company that seems to be doing so much so well. But, we do believe Spotify is making a few blatant mistakes. Incidentally, we believe that there is room for Spotify to grow and become more of a household name in the way iTunes is. 

We believe there is something to be said for owning music. While there are hordes of torrent sites and illegal music options, people at the end of the day, inherently want to do the right thing and not “steal” music. Yet, with Spotify, there is the sense that you are only “renting” your music and that when all is said and done (say, if you were to cancel you membership) you have to give it all back. 

This is a problem and is why similar but less successful sites like Rhapsody, Napster and eMusic have never really competed with iTunes. 

Why is that?

People want to own their personal brand, not rent it. Music is, for many, a major facet in self-identification — as to physically or digitally own the music that makes people “who they are” is indeed a significant feature. It’s why iTunes is such a powerhouse in the music industry and essentially, the leader of the category. iTunes allows users to purchase their music, which is a brilliant thing. Users are provided with an elegant interface where their owned music will remain with them forever. 

What matters is owning music and Spotify is missing this mark. They have miscalculated our need to possess our brand, to catalog our music and keep it for the entirety of our lives if we so wish.

As much as having a Spotify’s Premium membership is significant, and being able to make playlists and stream music whenever and wherever; ultimately the music is not the users. It is Spotify’s and that is not a positive thing for the brand. 

What we suggest for Spotify:

Maintain the position of being the music site for music purists:

Spotify is making wise marketing decisions. Solidifying their site as one for musical purists is an intelligent move. Such users can appreciate that through Spotify you can locate intimate concert recordings, as well as standard EP and LP studio recordings. By having many options Spotify keeps the music junkies of the world satiated.

Don’t try to be the next iTunes:

Spotify, please remember this mantra: “you will never beat the market leader by doing exactly what it is that the market leader doing”; these actions simply solidify your position as a runner-up. Spotify must be uniquely different from iTunes, eMusic, Napster, Amazon and Rhapsody in order to have continued success.

For example, iTunes maintains high audible quality and a song catalog that you must purchase. Spotify has the same high audio quality but they are lacking in interface structure. This could easily be enhanced. As of now, saved playlists, albums and artist files are not alphabetized (via web or smart phone app), nor is search-ability categorized for any kind of user convenience. If Spotify can improve their interface so that it flows with an intuitive and logical sense or order, a sense of musical ownership would be felt by users.

Improve your name:

We cannot deny the fact that the Spotify is a hideous name and lacks any significant meaning for their brand. As has been told by the companies CEO, Derek Ek:

This again takes us back to my flat that I had out in the suburbs of Stockholm. Martin and I were sitting in different rooms shouting ideas back and forth of company names. We were even using jargon generators and stuff. Out of the blue Martin shouted a name that I misheard as Spotify.

I immediately Googled the name and realized there were no Google hits for the word at all. A few minutes later we registered the domain names and off we went.

We were a bit embarrassed to admit that’s how the name came up so our after construction was to say that Spotify stems from SPOT and IDENTIFY.

Sure, this is cute story any integrity behind Spotify’s name is lacking feeling and personal identification.

Spotify is a young enough company in the music service game that they have the breathing room to improve their name. They can and should find a name rename that properly represents them. Currently, Spotify simply misses the mark.

In closing, Spotify has the potential for great success. With proper focus and differentiation, they can compete with iTunes. More importantly, they can carve a nuanced niche in the DRM-based music service marketplace and find great success in the years to come.

Visit Spotify by clicking here

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