No stranger to hyperbolic statements, we predicted that Apple, based on their pile of cash and large reach would lay waste to rival music streaming services including Spotify who at the time (and, for the most part now) were losing money by the barrel but four and a bit years later, Spotify is still a top the music streaming heap despite Apple’s best efforts to strangle the Swedish based company’s market leadership.
Since Apple launched Apple Music Spotify has gone from strength to strength despite Apple’s attempts to undermine the company’s growth which, as Spotify founder and chief Daniel Ek predicted when Cupertino based company stated their intention to enter the marketplace.
Ek saw what many (in including us) didn’t as he rightly forecasted that apple’s involvement in the marketplace would be a good thing as the company large reach would be exposed to what Spotify had to offer as well as other players in the space. Spotify has truly ridden this wave into global leadership in the marketplace despite Apple claiming a lead in the US. Apple are well behind Spotify when it comes to paid subscribers with spotify registering a whopping 100 million subs compared to Apple’s 60 million. What's more Apple’s growth in the marketplace is slowing while spotify’s growth continues largely because of the company willingness to play with others, a chink in Apple’s outright bulletproof armor.
However, it’s fair to argue that Spotify has to play well with others as it doesn’t have either the cash or ambition to be as vertically integrated as its main rival which leaves it with no choice but to secure partners that can help combat the still intimidating advantages Apple have over them. Apple hasn’t been shy about using these advantages whether it’s using its app platform to promote its service over what many see as the superior product or levying a “tax”, as Ek called it, on a competitor. Apple’s may have worked as iPhone are more likely to use Apple Music than Spotify on their platform but, with the noise made by Spotify, may have landed the smartphone giant in hot water with the EU who announced that a formal investigation will be launched back last May.
There are many reasons why Spotify has survived Apple’s attempts to put them out of business and once again bring the music industry to heel, but the main reasons why Spotify has largely thrived is a massive nine year head start and, at least in the music streaming space, is the superior business as well as product which has won the day for Spotify (for now at least).
In sum, this is an incredible feat as serves as one of the few examples that first mover advantage still matters in a space where being first to move is usually perilous (just ask yahoo and friendster before Google and Facebook showed up). However, what really makes this special is that Spotify are doing this were good companies such as Netflix is risking bankruptcy to compete despite being a long-time market leader. To wrap up, whatever happens in 2020, it would be no surprise if Spotify humble doubters like us and show us that smart business still has merit.
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