The Spotify's secret: how smart personification creates audience

Some days ago (3rd April), we all read about Spotify's debut at the New York Stock Exchange. A brave action for sure, considering the bad moment for the technological stocks (among them, - 3% for Amazon). Founded in 2006 by Daniel Ek and Martin Lorentzon, the Swedish company has collected more than 4,09 billion euros of revenues just in 2017. Numbers that perfectly describe the value and the success of this streaming service. With this entry into the financial district, we can say the second digital revolution is over. But why is this service so loved?

Spotify: an app that is changing the music industry

Nowadays, the majority of people has Spotify on their devices. Smartphones, tablet, laptops...every mean is fine when we talk about music. The app counts 159 million active users, of which 70 million paying subscribers worldwide for a total of 30,000 million songs.

It's keypoint is of course the retail distribution: a platform that can be accessed by everyone on all digital devices all aroung the world. And maybe you don't know, but it's starting to change the mechanism of the music industry too. Indeed, record and publishing companies are loosing their traditional position they had before the financial crisis: they identify an opportunity in the streaming market. For example, thinking about the premium version, music producers get more than the free visions on Youtube and other online channels.

The introduction of these new streaming services is affecting the music business: for this platform the big colossus like Sony, Warner Bros, Universal don't have any control. Indeed, Spotify sometimes send them some indications about the song length or its title (better short 'cause it fits with a digital app).

But why this change? Music companies are considering this new tools because of two reasons: on the one hand, they consider them the new future; on the other one, Goldman & Sachs forecasts revenues of 41 billion dollars for the music industry in 2030 thanks to this streaming devices.

The secret: the smart personification

Interesting is understanding why this app is so successful. There are many advantages that perfectly fit with the customers' desires. First of all, the accessibility: you can access it with all devices and listen to every song you want (except for mobile free version where you can't choose the single song you want to listen to). But, of course, the element that made this app so appreciated by the audience is the smart personification.

With smart personification we refer to the ability of service managers to understand the real hidden desires of customers and consequently offer them something people didn't know to want. Indeed, in which occasions and why do we listen to music? Too many different answers:

a. When we run or are at the gym

b. during parties

c. to focus on what we are studying/ during work

d. to express our current mood

So, instead of just offering songs and artist's album, Spotify managers began to design a unique value proposition: combining songs to create playlists for every usage and consumption occasion. Consequently, you can find the playlist for every kind of activity (sport, studying, working...) or atmosphere (romantic, party hard...). Or current mood (happiness, sadness...)too.

As result, they created an offering system everybody liked and still now it is able to generate and engage audience. Indeed, it's easier to suggest new usage occasions, instead of changing customer's behaviours. And the green mangers got it simply combining contents they already had to create something appealing.

In the end, we can summarize the guidelines to create something innovative and generate audience:

a. Don't look only at just what people clearly want, but also try to understand their hidden desires

b. Before creating something totally new, check you if you already have something to reach the goals set in the point before

c. Suggest new usage occasions instead of changing behaviours

For the rest, be smart and creative!