Listening is everything - Spotify

Spotify is a truly remarkable growth story. In just six years the company is valued at more than $10 billion and has more than 50 million users, 12.5 million of which pay for the service. But how did the company get to where it is today and what is its growth engine? We dive deep into Spotify’s story to uncover the key elements that helped them grow to incredible heights. We'll look at:

Existing Growth Levers:

  • A best-of-breed product that beat out existing players on every vector including: music catalogue, product features, pricing model and user choice
  • A freemium business model that bridges the gap between piracy and the pay-per-track model of iTunes
  • A massive US launch driven off the buzz of their European growth and invite-only system
  • An exclusive deal with Facebook to be the “default music service” of Facebook with their integration in 2011
  • Controversy between artists and the company over royalty payments and catalogue availability

Future Growth Levers:

  • Continued international expansion and mobile growth
  • Create new distribution channels with partnerships and new platforms
  • Winning over artists as suppliers to the Spotify ecosystem
  • Initial Traction / Early Growth

    A Disruptive Product

    As Kartik Ayyar explained on Quora just days after Spotify launched in the United States, the value proposition is at once fairly simple and quite profound: "Almost all of the music in the world at any time or place for only 10$ [sic] a month." [14] Options for accessing music online were limited prior to Spotify—consumers could listen to streaming services like Pandora, though they couldn't actually pick their own songs, or they could purchase tracks from iTunes. Other streaming services like MOG and Rhapsody existed, but hadn’t gained much traction with consumers, due to a combination of the pricing models, catalog of music and feature sets. Spotify, by contrast, aimed to give users complete control and access to any song, on demand, for just $10/month, along with a free option that offered more than simple radio-style streaming—not to mention the fact that it was totally legal. Though other companies are now attempting to offer the same service—more on those in a bit—Spotify was one of the first to offer this value proposition, and it has been overwhelmingly integral to the company’s success as a truly disruptive force in the music market.