Analysing the strategies used by successful mobile apps gives app founders valuable insight into how to create a profitable product of their own.
Amongst the most popular apps in the world, Spotify is one such example of a successful app. Valued at over $66 billion, Spotify currently has over 345 million monthly users and 155 million paying subscribers.
The platform boasts one of the largest-ever audio content libraries in history, including over 70 million songs and 2.2 million podcast titles.
Founded by Daniel Ek and Martin Lorentzon in 2006 in Stockholm, Sweden, Spotify aimed to address the growing issue of online music piracy prevalent in the early 2000s. It succeeded in achieving far more.
This article looks at how Ek and Lorentzon rendered a high-quality user experience to fundamentally change the way we listen to music and audio content (and created a $66 billion brand in the process).
We’ll take you through the aspects of Spotifys’ user experience that have made it successful, such as its revenue model, design elements, cooperation with artists, and features that endear the platform to its millions of subscribers.
Table of Contents:
- The mission: What has Spotify achieved?
- The revenue model: How Spotify made money
- The design: Simple yet stimulating
- The features: Behaviour modification and encouraging constant use
- The deals: How Spotify leverages exclusivity to attract more users
- The future: Where Spotify goes from here
- Wrapping up
The mission: What has Spotify achieved?
Spotify claims 34% of the music streaming industry’s market share, making them the most prominent music streaming platform in the world.
The company has overcome fierce competition, legal issues, and disputes with celebrities to claim the lion's share of the audio-streaming industry. But how have they done it?
To appreciate how Spotify got here, understanding how the internet, file sharing, and music-streaming completely changed the music industry is required.
Pre-1999, the music industry profited from the concept of listeners purchasing and owning a tangible object (i.e. vinyl’s, cassette tapes, or CDs) that contained the copyrighted musical data. The concepts of music streaming and downloading didn’t even exist.
When Napster, the first file-sharing platform, was created in 1999, everything changed.
Napster enabled users to freely share MP3 files with one other; directly causing a massive financial loss for record labels and artists. The impact that Napster and file sharing had on the music industry is so significant that CD sales plummeted the year following Napster’s inception.
CD sales in the U.S. (in millions) - pre and post-file-sharing (RIAA).
When Metallica sued Napster in March 2001 for copyright infringement, in the first case of an artist suing a peer-to-peer file-sharing software company, Napster was ordered to remove all copyrighted songs by Metallica or be shut down. This lawsuit set the tone for the legal and ethical struggle faced by labels, artists, and music listeners.
As more file sharing platforms emerged in the early 2000s’, such as Limewire, The Pirate Bay, and BitTorrent, it was clear that music listeners wanted easier access to a greater variety of music, and that they were willing to break copyright laws to do so.
Their only alternative to Napster, and breaking the law, was to pay Apple’s iTunes as much as $2 per tune—something they understandably weren’t very keen on.
But how could users get the music they wanted without infringing on copyright laws? Someone needed to bridge the gap between what the public wanted and the protection the music creators deserved.
Enter Daniel Ek and Martin Lorentzon.
Streaming as a concept
According to Daniel Ek, Spotify was conceived because he and Martin Lorentzon “thought that it was cumbersome to get content, despite the technology (Napster) being around since at least 2000”.
Ek and Lorentzon understood that to grow a profitable business, it needed to avoid the legal pitfalls flagged by the early file sharing platforms and avoid the same per-track purchase model as iTunes.
As Ek puts it, "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."
So, they created a platform where users didn’t own music but instead “had the world’s music at their fingertips”.
By heavily focusing on song loading speed (latency), Spotify wanted to replicate the experience of listening to a downloaded album to pull users away from file sharing and towards the concept of streaming.
This is the quintessential feature of Spotify that has revolutionised how we listen to music (and has made them billions in the process).
The revenue model: How Spotify made money
Spotify very cleverly leverages paid advertising and free service to simultaneously generate revenue while enticing new users to the platform.
How do they do it?
Spotify attracts new users with a completely free service and doesn’t require any credit card information. Free users can listen to the entire Spotify library, with one catch—they also need to listen to advertisements. Spotify benefits from this twofold:
- They generate income from the advertisements
- They get more users
Free users are then encouraged to upgrade to a paid monthly subscription, where music listening goes uninterrupted without ads and audio content is played at a higher quality. Premium subscribers can also opt to download music and access it without an internet connection.
Like the meditation app Headspace, Spotify also leverages social sharing and personal connection to drive revenue user acquisition. Simple features like “share this song” encourage users to connect with their friends and draw more people toward the app.
Social-sharing features make user acquisition seamless and enjoyable for Spotify users
The design: Simple yet stimulating
Part of Spotify’s success is attributed to how easy and engaging their on-app interface is. Ek and Lorentzon’’s vision for their app was one of a seamless listening experience, and interacting with the app had to replicate that.
Spotify chose their dark interface after testing different designs on its users. The team felt the dark interface enhanced the user experience by highlighting the album art within the app:
“We believe that when you have music or art that’s very colourful and very artistic, and you have beautiful cover art for music, that it really shows more clearly visible in a product like this, when it’s about entertainment”, says Michelle Kadir, director of product development at Spotify.
Delivering a consistent, seamless experience on all devices has removed any barrier a user has to access Spotify.
Spotify started as a desktop program, and its successful transition to a mobile app for Android and iOS was paramount in keeping the brand alive and growing.
The desktop program uses structurally consistent grids and visually spaced lists to organise the vast array of content.
The mobile interface focuses on a scrolling discovery experience to keep the screen uncluttered, with text standing out on the dark interface.
Quality button design
Having clear calls to action is essential in facilitating a seamless and enjoyable user experience that keeps users coming back.
The black, white, and green colour scheme Spotify uses for its buttons aligns with app branding and directs user intention.
The solid vs. outlined buttons also attract users’ attention towards primary goals (play) without detracting from the possibility of engaging with the secondary objective (follow).
The app also reassures users during their experience with visual feedback cues, particularly hover states and click interactions.
These features help users know exactly what they are doing and what they have done to facilitate the all-important seamless user experience.
As Spotify arranges the songs, albums, and artists in linear grids and lists, using curved lines for the buttons helps them stand without interfering with the aesthetics of the rest of the screen.
Doing so invites users to interact with the buttons and facilitates user intention.
Users start to realise how Spotify communicates the more they use the platform. By being consistent with their design language, Spotify encourages users to navigate the app intuitively.
For example, artists are consistently presented in spherical frames, while songs and albums are square. Users quickly become familiar with this language and learn that a square means ‘play’, whereas a circle represents ‘see more’.
Regular Spotify users quickly learn circles means artists, and squares mean songs or albums
The features: Behaviour modification and encouraging constant use
A critical factor in creating any successful mobile app is to make the app part of a user’s daily life.
Having people use the app habitually means they sign up month after month, year after year, and they also encourage their friends and peers to do the same.
As a music app, Spotify already lends itself to daily use. But what makes it so successful is how the app has changed our music-streaming expectations and personalised the user experience.
Before file sharing and streaming services, music listeners were restricted to the type of audio content they could consume according to their personal libraries. If you didn’t own a CD, you either visited a friend who had it, went and purchased it, or couldn’t listen to it.
People listened to music every day, but the ownership nature of the music industry pre-1999 meant they just didn’t have access to the variety available to us in 2021.
Spotify fundamentally changed this.
The platform switched the music listening industry from one of ownership to one of access. As Daniel Ek said, his vision was to create a place where people could access the world’s music. Within their core offering, Spotify had secured a position in their users’ daily lives.
A place for discovery
Using algorithmically curated playlists and personalised recommendations, Spotify not only gave people the music they wanted to listen to, but they also offered people the unprecedented opportunity to discover entirely new music from all over the world.
When Spotify introduced Discover Weekly in July 2015, it attracted more than 40 million new users. They featured a curated playlist of 30 songs each Monday according to the listeners’ preferences and habits.
This created a hyper-personalised relationship between app and user and proved the power of algorithms in suggesting content to keep users engaged.
Spotify uses this same data tracking to come up with playlists such as:
- “Made For You”
- “More of What You Like”
- “Your Top Songs of the Year”
In effect, they leverage emotions such as nostalgia to further embed the app in users’ daily lives.
Spotify users also engage with the platform on an educational basis, with access to over 2.2 million podcast titles. This evolution into an educational and recreational audio-streaming platform further secures Spotify as the market leader for audio content.
Spotify leverages nostalgia and memories with algorithmically curated playlists to engage and retain users
Pushing it too far
The Spotify engineers got so good at suggesting appropriate content for its users that when the app algorithm gets it wrong or the app makes an unwanted suggestion, users might respond unfavourably.
For instance, many users reacted with distaste when starting July 29, 2020, Spotify repeatedly suggested their new exclusive podcast listing “The Michelle Obama Podcast”.
As regular users had become so accustomed to algorithmically determined suggestions, not ones based on marketing, some felt they were being told what to listen to by a platform they had grown to trust.
Despite some discontent, however, exclusive listings (alongside exclusive listing marketing initiatives) has proven to help Spotify retain users, grow in the app store ratings, and increase their share price.
The deals: How Spotify leverages exclusivity to attract more users
Spotify started announcing exclusive celebrity deals in 2020. Exclusive listings such as Kim Kardashian West (KKW), and The Joe Rogan Experience have helped Spotify diversify their celebrity podcast library to attract new users and retain old ones.
Signed in May 2020, The Joe Rogan Experience was responsible for a significant increase in users on the platform and also in boosting Spotifys’ app store listing in 17 different markets.
Spotify App Store Rating & Share Price
These exclusive partnerships also appear to positively influence investor interest, with the price jumping by $14.8 for Joe Rogan’s announcement and $25.5 for KKW.
In alignment with their mission of bringing the world’s music and content to their users, Spotify has also focused on releasing Original & Exclusive (“O&E”) podcasts in Latin America, Central and South-East Asia, such as:
- Caso 63 in Chile
- Telugu Lifetime in India
- 123 Segundos in Brazil
- 6 exclusive podcasts from Indonesia
The future: Where Spotify goes from here
It can be difficult to imagine where Spotify can keep going from here.
It’s clear that the platform will continue to evolve its machine learning algorithms and keep suggesting more relevant, newer music to keep users engaged (and away from competing platforms).
Many of the recent updates in 2021 have been focused on improving the podcast listening experience. Giving visual cues to remind users which podcasts they have tried and how far into the episodes they are increases podcast engagement, so it’s likely we’ll see the platform move more heavily into podcasting.
Users love and trust in the personalised relationship they have with their Spotify accounts, so hopefully, they keep this top of mind as they continue to scale. When Spotify betrays this relationship by marketing material the user doesn’t want to see, it can damage loyalty.
From where we are in 2021, it’s easy to take our access to information for granted. We can more or less listen to any genre, album, or song we like without expending much energy or needing to navigate any copyright loopholes. In large part, we have the founding team at Spotify to thank for this access-rich experience.
As an aspiring app founder, keep in mind what the founders said at the beginning: “We wanted our users to have the world’s music at their fingertips”.
They didn’t say, “we want to build a $66 billion brand”. They had a clear goal, and they had the opportunity to solve a problem for parties on both sides of the music-sharing debacle.
By pursuing an ideal, everything else came naturally. They easily attracted the designers, software engineers, marketers, artists, and record labels along the way, because what they offered was so valuable and it solved a large problem.
Focus on fixing your problem, and everything else will fall into place.