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Apple Music: What Should Spotify Do About It?


Apple Music: What Should Spotify Do About It?


Apple Music has jumped into the streaming game and Spotify should be vigilant about its brand and profitability, or be overshadowed by the new service. Just like Apple did to outflank PC, Spotify must create a brand identity that resonates so well with music lovers that it becomes impenetrable to Apple’s reach, and thwarts its attempt to leverage its existing brand equity to bully its way into the streaming market.


Spotify must create a tribe whose members will ward off an Apple Music intrusion. Their buy-in will require consistent content and experiences across a streamer's entire life. It will require imagination. It will require Spotify to leverage its creativity, deep music roots and nimble quality to be different in the ways that streamers are different than everyone else. And not like a bunch of uniform red music bubbles.

To do this they will need creative, strategic thinkers who have a deep understanding of a streamer’s lifestyle and a proven ability to change brand perception through content and experiences. People like me. Now let’s move on to the other elephant in the room: profitability.


It seems as though audience growth has been the focus for Spotify so far, and now the big challenge is profitability. Why has it stagnated so long? Potentially because profits are in lock step with royalty payouts. So, how does Spotify become more profitable? By getting creative and strategic about the up-sell.


Obviously there are many approaches to this. One way to go about it is to embrace the concept of micropayments. It’s no secret that Spotify has many unpaid users. Some people simply won’t pay for it on a recurring basis. But many people don’t want to pay for apps either, yet those same people create revenue through in-app purchases.

Micropayments capture a user’s impulse at a moment in time when a new need is created by the app itself or by some new situation in the user’s life. Apple saw an in-app purchase revenue increase of 50% in 2014. FIFTY PERCENT. So, why doesn't Spotify capitalize on that known mechanism? Premium add-ons is another, similar concept that Spotify should consider as well (just look at how OKCupid does it), but we'll stay focused on micro-payments for now, starting with a new feature.


Think of how many party hosts want the perfect music playing all night. When you subscribe, Spotify is amazing for that. Now think of those people who just won’t pay for a monthly subscription. No matter what. They either have to suffer the embarrassment of commercials interrupting the vibe all night or use some other new service that hasn’t gotten around to audio ads yet. This is bad for Spotify. Now, insert “Just For Today.” $1 and your Spotify ads stop for 24 hours. 

Ahh, commercial free party hosting music for $1. Doesn't that feel good? Wasn't that easy? This is a micropayment that an unpaid streamer in a hosting situation is virtually compelled to make! The same could apply to a road trip or a big meeting. You’re welcome, Spotify.


Spotify folks: are you compelled at all? If so, I’ve got a ton more ideas and a ton of passion for your product. So get in touch. Hope to hear from you soon!