Tag Archives: spotify

Jan 25 2016
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Business, Digital Strategy, Insight, Planning

Why Spotify Discover Weekly Is The Best Music Curation Tool?

Apple Music arrived with big bang. Its approach to music streaming is surprisingly old school. It relies a lot on human curation and its programming resembles old radio (some of the shows are definitely worth listening though). It´s biggest rival Spotify is relying more on big data. At the moment it seems that latter approach seems to be the winning formula. Eventually recommendation engines will become a core differentiator (as the libraries will become quite identical) for streaming services, so the headstart Spotify has is not insignificant.

Human curation was the way taste making happened back in the day. I used to rely almost totally to Dj Anonymous on my music recommendations. Best dj´s in the world have much more refined taste than any machine yet. The challenge with human curation is that it does not scale.

The recommendation engines were not really been yet up to task because the algorithms have not been advanced enough to recommend right songs. Music is nuanced thing and linear recommendation is not usually providing satisfying listening. Previous Spotify recommendations have been borderline ridiculous:

Prince Spotify

Previously there has not also been enough data available. For recommendation engines to work, you need to have massive amounts of data and something that is relevant. The key for Discover Weekly to work so well is that Spotify realized that the data they should be mining are the playlists people are making.

“For all the special sauce and the algorithmic work, the fact that we’ve kept it simple and that it’s just a playlist has really helped it resonate with people”
–Matthew Ogle (Discover Weekly Product Owner)

The more people are making playlists in Spotify more “human curation big data” they are gathering. Currently there are over 2 billion playlists in Spotify. Spotify has been able to strike the right balance on learning about your listening habits and combining that with the big data:

“On one side, we’ve built a model of all the music we know about, that is powered by all the curatorial actions of people on Spotify adding to playlists. On the other side, we have our impression of what your music taste is. Every Monday morning, we take these two things, do a little magic filtering, and try to find things that other users have been playlisting around the music you’ve been jamming on, but that we think are either brand new to you or relatively new.”
-Matthew Ogle (Discover Weekly Product Owner)

In the beginning I wasn´t that impressed with Spotify´s weekly recommendations. Majority of the songs I knew already (20+ years of record collecting has its handicaps). After couple of weeks I started to appreciate the brilliance of it. Spotify Discover Weekly has become my “comfort playlist”. It plays stuff I know, but drops every week couple of nice gems I had not heard or had totally forgotten. During working week I listen to lots of weird stuff outside my usual taste profile, Spotify´s weekly recommendations don´t seem to pick on those anomalies and the quality is constant:

Like mentioned earlier, eventually data will trump human experience. In many fields, we are already there.

“In the next generation of software, machine learning won’t just be an add-on that improves performance a few percentage points; it will really replace traditional approaches.
…
Today, you’re much better off building a smart system that can learn from the real world – what actual listeners are most likely to like next – and help you predict who and where the next Adele might be.”
– Eric Schmidt, Alphabet executive chairman

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Apr 23 2015
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Business, Digital Strategy, Planning

Loalty is Laziness: Would You Change to Apple Music From Spotify

Apple will launch its streaming service Apple Music June 30th.

Although there was not anything mind-boggling with the launch, it will dramatically shake up the music streaming service landscape. Below I am answering all the questions that you are thinking about the launch, because I can:

Will Apple Music be bigger than Spotify?
Yes.

In terms of paying customers, Apple Music does not offer free version, which is probably a wise move. Currently paying customers create 26 more times the revenue compared to free customers in Spotify.

Spotify has 70 million users (of 20 million are paying). Apple has over 800 million iTunes accounts. Do the math. Just converting 2,5% of the current user base (of which not all are naturally downloading music) gets them even.

However it might not be as easy or as profitable it would seem at first glance.

Paying for streaming music is a niche activity. Only 5% of the people over 13 years old pay for streaming services. During the digital download heyday, 25% of the people were regularly paying to download music and astonishing 80% of people were regularly buying cd´s when that was popular. Those days will never come back.

Optimist would say that there is an opportunity to increase the amount of subscribers. Pessimist would say that we will never reach a level again where even 25% are paying for music. My thinking is somewhere in between: there is opportunity to increase the paying streaming category but it requires cheaper options than the current default 9.99$/month. In terms of people paying for music streaming services are the best bet for record labels, because ownership of music seems quite expired concept in 2015.

Because of its ecosystem and deeper pockets, Apple has better opportunity to grow the category if it is to grow. Free streaming services will remain in the mix, because too aggressive clampdown for free streaming would probably retort people back to pirating the music. Also those who pay for music are not necessarily the tastemakers of what is hip and cool. In 2015 the investment to music is not necessarily an indication of its popularity.

Is Apple music then a better service than Spotify?
No.

At least based on the current information.

In terms of library they are in parity (30 million songs both, no Beatles in either of them). The main features Apple was talking about were nice-to-haves, but nothing that would immediately make people to switch. Beats 1 is essentially just a tradtional radio. Curation from tastemakers is something that sounds nice in powerpoint, but masses don´t really care. Same thing with Connect, music fandom is way more niche activity than non-committal music consumption on background.

Will people flood from Spotify to use Apple music?
Well, it depends.

If you are invested in Apple ecosystem and have been buying from iTunes music before, that is likely to happen. Over half of the Spotify users are also using iTunes. If you do not have that legacy, you are not likely to switch from Spotify unless Apple manages to bully its way with labels to worsen the current Spotify.

Why?
We are lazy.

Brands often mistake the laziness of users for loyalty. It is natural for people to try to avoid stressful situations and change (even how big or small) is always stressful.

It is hard to unlearn your habits, whether they are good or bad (especially the bad ones). It is also hard to learn new habits even how beneficial they would be to you. Therefore just making things easy-to-use is not enough for people to make a switch. They need incentives and motivation: the right balance of stick & carrot. People keep using hard-to-use methods (like pirating) because that is the way they have accustomed themselves and cost of learning something new feels too hard.

In many ways both Spotify and Apple will benefit from the laziness of their users.

Current Spotify paying users will not flood to Apple. Those who are using the free ad-fueled version are different target audience altogether, so Spotify will also be growing in terms of overall users. If you are Spotify free user and have not turned to paid version with Spotify, it is quite unlikely that you will start paying with Apple. On the other hand, testing the Apple Music will be just a click away and it works seamlessly with your iTunes library. So those people who have been postponing moving to streaming services and have still been paying for digital music downloads, don´t have that many excuses anymore.

And to answer the question posed on the title of this: no, I will not switch to Apple Music. On the other hand, majority of my investment in music still goes to vinyl records. Like said before, old habits die hard.

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Nov 17 2014
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Business, Digital Strategy, Insight, Marketing Strategy, Planning

Streaming Services Are The Last Hope of Music Industry

Last week Taylor Swift has been applauded as a crusader of music rights as she withdraw her album from Spotify:

“[People] can still listen to my music if they get it on iTunes. I’m always up for trying something. And I tried it and I didn’t like the way it felt. I think there should be an inherent value placed on art. I didn’t see that happening, perception-wise, when I put my music on Spotify. Everybody’s complaining about how music sales are shrinking, but nobody’s changing the way they’re doing things. They keep running towards streaming, which is, for the most part, what has been shrinking the numbers of paid album sales”

Taylor Swift´s comment is just a hypocrite sugarcoating of a smart business move and a great marketing stunt. She is still able make a platinum-selling album (the only one this year for that matter), so she concentrated on maximizing the physical sales. She would have left her albums in Spotify, if they had paid her more through premium service. She is smart businesswoman, so she definitely did the right thing for herself (proven by those platinum sales). It is not clear though, would she make even more money if she would have left her album in Spotify?

The last point of the quote is however just pure stupidity. Paid album sales have been shrinking way before no one had ever imagined music streaming. Streaming services kill downloads (both legal & illegal), because downloads are inferior format. Music streaming has been a truly a blessing for music industry. I might listen the new Taylor Swift album once on Spotify because all the publicity. She would get something out of that listening, but more than from me not listening that album or using BitTorrent. I would not buy or even illegally download that album in any case, because I am not that interested. Big stars benefit more from lurker listeners than smaller artists.

Essentially there is only one important thing to really understand about current music industry:

People will not be paying for physical music anymore. Period.

This is called progress and you cannot stop it. Taylor Swift is an outlier with her platinum sales. Increase of vinyl record sales is just a too well covered hipster activity. You have to be a total moron to think that vinyl sales could help even slightly the struggling music industry. The real question is: are people willing to pay for streaming services? They are the last resort to make any money from the actual songs. Currently it seems positive and with the launch YouTube Music Key, there is enough competition to keep it interesting for the near future.

It is naturally disheartening to read about that Iggy Pop cannot live with his music or how little Aloe Blacc gets royalties from writing one of the biggest songs of the year:

Avicii’s release “Wake Me Up!” that I co-wrote and sing, for example, was the most streamed song in Spotify history and the 13th most played song on Pandora since its release in 2013, with more than 168 million streams in the US. And yet, that yielded only $12,359 in Pandora domestic royalties— which were then split among three songwriters and our publishers. In return for co-writing a major hit song, I’ve earned less than $4,000 domestically from the largest digital music service.

But what is truly the alternative?

Iggy Pop makes his money from advertisements. He could not do those without being a musician first. Although he remains fit, I doubt it is from starving.

I appreciate Aloe Blacc tremendously. I have been supporting him by buying physical records made by him from the start of his career with indie group Emanon. Is Aloe Blacc better off now or when he was pressing and self-publishing his records? Although the revenue share from “Outside Looking In” was probably more favorable than the terms and conditions of Spotify, he is now more successful by every account. “Wake Me Up!” would not be as big song without Spotify and the exposure of that song has benefitted Aloe Blacc way more than the petty 4000$ from the streaming royalties. The sad fact just is that the individual hit song will not necessarily make you money anymore. That song is more of advertising. Is it right or wrong is a philosophical question, but does not change the shifted dynamics of music business.

I agree that 4000$ looks shameful for making one the biggest songs in the universe, but life is not fair. People do not want to pay for physical music anymore, expect for old luddites like me, who still get excitement from the special box sets. Actually I am more worried about the viability of Spotify´s business model. They are currently handling over 70% of their revenues to different rights holders according to Spotify CEO Daniel Ek:

Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists…that’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify.

They are not profitable yet, either.

“Wake Me Up!” has been estimated to generate almost million in Spotify royalties. Someone is getting paid (and there might be a master plan behind it). The history of music has not really been a financial success story of artists. Record labels, shady managers and other Svengalis have exploited the creative work of musicians. So either the artist are afraid, smart or just increasingly naïve by pointing the finger to Spotify instead of their employers, record labels with whom they have signed their contracts.

You can still make money out of music, especially if you are strong brand, innovative or just really good. Dave Grohl (from one-of-the best live bands in the world) sums it up nicely on Reddit discussion:

Me personally? I don’t f*cking care. That’s just me, because I’m playing two nights at Wembley next summer. I want people to hear our music, I don’t care if you pay $1 or f*cking $20 for it, just listen to the f*cking song. But I can understand how other people would object to that. You want people to f*cking listen to your music? Give them your music. And then go play a show. They like hearing your music? They’ll go see a show.

Amen to that.

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Oct 14 2014
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Advertising, Digital Strategy, Insight

Anatomy of An Insight: Base + Spotify PartyDrone

I thought that everything there were left to say about drones was in this ad:

Luckily I was wrong, because this is really nice:

Insight: Many festival sponsors try to catch the attention in the actual festival area. That is hard, as you are competing of the attention with the main attractions: the bands. Therefore wise marketer uses places that are not that contested. Like in this case the route to the actual festival area. Especially in the Nordic music festivals, camping area is quite untapped potential for many marketers and people actually craving for entertainment. Personalization was nice added bonus, but I think that just bringing music and entertainment to places which do not have those, is a great insight and idea.

I see potential for this idea to be used in further campaigns for Spotify as well and not just a one-off. In general, I feel that Drones are perfect fit for surprise and delight –campaigns. Just as long you remember that drone is not the actual idea, but what inspiring, innovative and insightful you can do with the drone.

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Jun 16 2014
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Insight, Planning

You Have Listened to Led Zeppelin, Would You Like to Listen to Prince?

First rule of being a planner:

Don´t think that you represent target audience.

You have to understand the target audience. Know as much as possible about them. Talk with them. But never think that your own behavior resembles anything that normal people are doing.

Unless you are targeting 30+ years old dudes still wearing sneakers and knowing too much about popular culture.

Majority of planners are snobs in various fields, and this does not exclude yours truly. Therefore I have never seen the reason for automated recommendation algorithms. I will always know what I want to listen or watch. I have spent majority of my life listening to obscure records and watching odd movies to be able to entertain myself in every occasion without outside help. If I need recommendation, I only trust in a handful of established aficionados, who have earned my trust.

I will always favor human curation over algorithm.
Therefore this recommendation in Spotify made me laugh:
Prince Spotify
You have listened Led Zeppelin, now listen to Prince.

How stupid is that? It would be like recommending broccoli in restaurant because you like meat.

“Eugene Goostman” might be able to act like a human, but this recommendation did not raise hopes for reaching singularity for a while.

But here´s the trick:
I like Led Zeppelin.
I like Prince (the song is from one of my favorite Prince albums).

So actually recommendation was not off. It just came from surprising angle. Maybe the Spotify algorithm knows more than it appears. If there would be more people, who listen both Led Zep and the The Artist Formerly Known As Prince, the world would be a better place.

Eventually it boils down to this: as long as the recommendation pleases the audience, it does not matter how off or not it is. That is why I don´t really think that the future of streaming services lies in super-smart recommendation engines or human curation. It will be about vast catalog. Streaming service, able to secure The Beatles to its service, will probably go long way.

Maybe recommend some Rolling Stones to go with that.

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Feb 04 2014
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Digital Strategy, Planning

Forgotify: Exploring The Far Far End of The Long-Tail

There are over 4 million songs in Spotify that have never been listened. That is 20% of all the songs in Spotify.

That number is good demonstration of Internet market dynamics. It used to be (and still is) hard to get your song on the radio. If you were able get on the playlist, you were quite sure to get certain amount of listens. Nowadays, it is easy to get on Spotify, but to be actually heard requires active promotion. Especially, if you are not Daft Punk.

Forgotify aims to change that (or at least get a couple of these unheard songs on rotation). It is a discovery website, which enables you to randomly listen to those unheard “gems” from Spotify. The songs were not necessarily that horrible. I find some classical music, Hebrew folk songs, chansons and Christian punk*. No one just knows that these songs are there to find and listen. And no one cares enough to promote them.
Forgotify
*“Scaterd Few was a Christian punk band from Burbank. CCM magazine described their music as “pure punk for dread people,” stating that it was a cross between Janes Addiction and Charlie Mingus.

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Nov 06 2013
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Strategy

Could You Sell Everything with Subscription Business Model?

There has been a surge of subscription-based businesses lately. I am not only talking about subscription entertainment services like Netflix, Hulu or Spotify. There has been also surge in subscription models both in mundane physical (Dollar Shave Club) and in high-interest software (Adobe Creative Cloud).

Naturally the model is not new, newspaper subscriptions have been around for almost 300 years. You could also view library institution as some kind of a precursor to Spotify and other entertainment subscription services. You “subscribe” by paying taxes (in Finland), or by paying nominal fee (in Singapore).  Digital has enabled more smoother service and also more innovative business models (Birchbox). In catalog-era Birchbox model would not have been feasible, but thanks to Internet you can convert people more easily from receiving the samples to buying the actual products online.

The upside for the companies with subscription model is two-folded, firstly lifetime-customer-value will likely be higher and the business becomes more predictable. For consumer the main benefit is of course the convenience. You are getting new socks every month, they are invoiced automatically and you do not run out of socks.

“All the evidence suggests that consumers love subscription content models — it’s the original model of magazines and newspapers and cable, and now it’s the power behind Netflix.”
James McQuavey (Forrester)

Subscription model is not right approach for every company, but might be something to consider. Whether you are working in product or service, it might be interesting addition to your portfolio or differentiator against competitors. Some considerations I have noticed based on subscription based models:

1. It has to be habitual usage for products
Tie-a-month works for snappy-dressed businessman but is not necessarily appealing to a person, who puts on the tie only to weddings and funerals. Usually the cycle is monthly, but could subscription model work with longer breaks? Your computer would be updated yearly? Your car would be updated every second year? Maybe not.
Interesting examples:
Miru (Monthly subscription to contact lenses)
French Cellar (Monthly subscription to French wines in Singapore)
The main challenge with product subscriptions is that you end up with lots of stuff. For many people that is not necessarily a problem, but as people. That is why I think there is definitely some kind of opportunity with combined subscription & swapping/recycling service (Such as Swapstyle or Boxcycle). It is definitely route to explore.

2. Subscribed Service is about access you value
Actually with Spotify you are not really paying for ability to listen to the music you are paying for the access to the music. You might not listen to music that much, but you want to pay for the access to that Barry White song on just the right moment. This is especially easy to see with Priority Pass. The knowledge that you could go to lounge in Airport makes already your travelling more enjoyable, whether you entertain that access or not.
Interesting examples (besides the abovementioned):
Ordergroove: They actually create subscription model platforms for their clients. I am not sure if they have some kind of subscription based compensation system build in their billings, but it would make sense.
One opportunity comes to mind with services. I like to go to different culture events, but the information for those comes many times too sporadically. You might notice interesting exhibition when it is already over. You have to search for the info from different sources, which takes time. What if you could have subscription-based culture package? You would select your level of commitment: from light once-a-month to heavy-user once-a-week. Then you would get access to an event on a fixed date. The model could also have range from just recommendation to total turnkey solution with tickets and transportation. That would be also at least worth an exploration.

Could you change your business to subscription model?

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