Music, an art, which has mesmerized all of us in this monotonous life. Music has become a part of our life which cannot be denied. Today, Not only Music but music artists are also getting recognized by millions of people through various mediums.
Music has been alive for hundreds of years. Streaming music online has become a common and a very popular practice nowadays.
What started out as Music piracy became an 11 billion dollar industry, making 56% of global music industry’s revenues in 2019.
And one company has become the clear winner globally in terms of paid subscribers, that’s none other than ‘SPOTIFY’.
Spotify has dominated the music streaming industry with about 130 million premium subscribers worldwide.
Despite being in number two behind Apple Music in U.S. in 2019, Spotify has been on a winning streak recently with the acquisition of Joe Rogan’s incredibly popular podcast, along with exclusive deals with Kim Kardashian and DC Comics, all in an attempt to broaden its scope from music streaming to audio giant.
The man behind the popularity of the name ‘SPOTIFY’ is Daniel Ek.
Daniel Ek is the reason behind that we know the name “Spotify” now. He was into programming way back then. He was earning thousands of money by designing websites. He co-founded the company back in 2006 and has been in charge as the CEO ever since. He’s from Sweden, by the way, Spotify is a Swedish company.
He was a genius programmer and businessman with the exact impressive background.
He went to college but only for a few weeks before dropping out and quickly becoming tremendously successful working at various tech companies. His big payoff was in 2006 when he sold his online marketing company for over a million dollars and briefly retired directly after. All of this happened before the age of 23 so he decided he wasn’t quite ready to retire especially considering he perceived a great opportunity for a new business.
They spent a couple years getting everything together and in September of 2008, they officially launched Spotify. Initially the service was only available in six large countries throughout Europe but by 2011, it was finally available in the United States and as of 2019 they claim to have reach in 79 different countries and territories
There are some reasons behind its success. First of all, the music Catalog that was their first big hurdle back in 2006 and it remains a huge risk for them today. this relates to what I talked about in the beginning a core difference between
Spotify and Napster (music file sharing site) and all those other crazy illegal sites is that Spotify pays for the rights to stream the songs they have to make all these deals with record labels and original artists.
Spotify provided a potential solution as it was a cheap and easy way for the users to access the music but still have the labels and artists and everyone else get compensated.
After two years of making those deals, they had secured enough European streaming rights to launch their service in Europe. Their growth after the launch made them even more attractive to record labels. They made new deals with Universal Sony Warner and by 2011 had secured enough US streaming rights .
They’ve existed for over a decade in a way that they were the first of their kind predating any competitor that uses this model. Their biggest competitor Apple music didn’t exist until 2015.
They had a seven-year head-start. In the United States, the two are very similar.
As far as paid subscribers are concerned, Apple music passed Spotify in April of 2019 The difference comes internationally which leads into the next reason. Spotify is more focused internationally. Not surprisingly, most of the revenue comes from outside of the US. They started in Sweden, focused solely on Europe for years and as a result are dominating the international market
Spotify is really good at figuring out what you want to listen. Many people agree that their recommendations are among the best in the industry. This may be related to their continued investment in research and development and the fact that they had that jump start in collecting the data and in perfecting their system.
The biggest reason of their success might be their free option. It’s got to be the biggest difference from Apple music.
Spotify has this option where you can listen to everything they have to offer for free. This version of Spotify has so many limitations and it allows to skip a few songs at a time that forces people into listening to things. Then the ads came on every few songs which you have to expect but it gets annoying.
The three-month trial for the premium is so much better. When the three months end, No one can go back and end up paying $10 a month.
As of September of 2019, they have 113 million premium members compared to 141 million members on the free plan. The money they make from those ads is almost insignificant but that’s a group of people that are very likely to upgrade.
More than 60% of their new premium members come from the free service and they have a very specific path to make it happen. Around 75% of those people who engaged in the free trial ended up converting to a paid premium subscription because it’s hard to go back .
This is a controversial yet effective way of attracting customers as being a big reason for their success.
Spotify took advantage of the conditions of the industry and later on their size to build up an impressive music catalog. With just about every song you can ever want to hear take an advantage of a head start over all their competitors in the US and internationally. Part of that includes their data collection resulting in sophisticated recommendations and playlists. The unique free service providing a path for millions of people to sign up for their premium service that they really care!!
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