Spotify’s Secret Sauce of Success

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Kaihan Krippendorff takes a look at the history of the music industry to demonstrate how Spotify excels at delivering customers what they want when they want it. 

In 2006, a pair of Swedish entrepreneurs banded together to fight an ongoing problem: Piracy in the music industry was costing artists, retailers, and record companies billions of dollars in lost sales. Customers who had previously gone to CD or record stores to purchase music were now evading legislation to download songs for free, instantly into their music libraries from services such as Napster.

When Napster unexpectedly shut down in 2002, Kazaa, another controversial service, sprung up in its place. Swedish entrepreneur Daniel Ek saw an opportunity to combat illegal online activity through another means: delighting customers.

“I realized that you can never legislate away from piracy,” he said in a 2010 interview. “Laws can definitely help, but it doesn’t take away the problem. The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry. That gave us Spotify.”

He joined forces with fellow entrepreneur Martin Lorentzon to create what is now the most popular music streaming platform in the world. How did they do it? By delivering what the listener wants to hear, when and where they want it—and sometimes before they even realize exactly what it is they want.

THE EVOLUTION OF MUSIC THROUGH A PROXIMITY LENS 

An industry-wide trend is underway. Company strategies and customer desires are shortening the distance between when people decide they need something and how long it takes for them to get it. My friend and writing partner, Rob Wolcott, offers the following definition: “Technology is driving the production and provision of products and services ever closer to the moment of demand.”

Many of us have benefited from the somewhat creepy omniscience of Amazon’s anticipatory shipping—the retailer predicts products we might want and delivers them to a nearby warehouse before we’ve even placed an order. But the research Rob and I have done shows that this extends far beyond retail; proximity is the future across all industries, and it’s been in the works for years. In order to pinpoint where Spotify seized the opportunity to capitalize on proximity, let’s take a brief look at the history of music purchasing.

Key points include:

  • The changing technology
  • Napster and file-sharing
  • Applying proximity to your business model

 

Read the full article, WHAT SPOTIFY CAN TEACH US ABOUT PROXIMITY, on Kaihan.net.