Spotify Sets an Amazing Record
Spotify is the first company to achieve 100 million paying customers.
No one else has achieved this!
Apple is a distant #2. Spotify's paid subcribers are up over 30 percent from a year ago, with 217 million total subscribers. Spotify launched in India only last February so there is still much room to grow. Spotify's paying base is about double of Apple's, and this does not seem likely to change with Apple's current only-average offerings (Apple is not a leader in HD music, for example). Spotify also got the EU to start an antitrust investigation of Apple, over the the appstore being non-competitive.
As these numbers continue to grow, it becomes less and less likely that any other streaming service can match them - there will be fewer and fewer in the potential pool of paying customers. This means time is of the essence, for all of Spotify's competitors - whatever moves they are going to make, they need to do it now - and do it quickly, and comprehensively.
Spotify also has much potential growth possibiities from partner arrangements (like with speakers), and with various kinds of advertising. But they have to always be careful not to make their base of paying unhappy with too much advertising.
In 2018, overall music industry income grew at the fastest rate in many years, which is good news for everyone!
We read a very good article at DigitalTrends about the top 5 music streaming services, and it seems like a fair assessment:
#1: Spotify: Best discovery, big catalog, many new releases, large number of Playlists
#2: Apple: Best for Apple users, good integration with other apps; needs higher quality
#3: Pandora: Best for passive listening, very good curation; not the best user interface
#4: Soundcloud: biggest catalog, withtons of Indie tunes; but music discovery can be complicated
#5: Tidal: higher-quality music than most services, and a big catalog; needs better user interface
T'his list can change over time, but these five are the main ones. We recommend picking one of the first two for your paid service, play around with Soundcloud, and use Tidal if you have more high-end equipment. Enjoy!
Branding and UI Matter
Spotify has the best UI. It looks great on both a computer and on mobile. Its easy to use, things do not feel hidden, and nothing feels missing. I give them an A for their UI; it is much better than any other music streaming service.
Apple is better than Pandora but not that impressive. Apple users are somewhat of a 'captive' audience; Apple is unique in this way. I feel that there is nothing compelling about Apple that will draw in many non-Apple users. Apple has potential to improve, however.
Google is another matter. Their three music services are confusing, and with no end in sight, and Google user interfaces do not impress; Google+ is an example of a an unimpressive user interface, far less capable than other social networks, like Facebook. I don't see Google making inroads on Spotify from a design point of view.
There are now over 200 music streaming services in the world. Many of the smaller ones were designed by 7Digital and some of those have very good user interfaces.
But Spotify is clearly the best. UI matters - a lot. Not everyone gets it right - and in fact, few do.
Everyone talks about the quality of music; comparing the CD to vinyl, different bit rates, and so on. As an old-school audio buff, I wish there was better quality digital music. Sadly, our world has such strong trends towards convenience over quality.
There is no single standard, or even language term, for high definition audio. its a complex subject. Standalone efforts at HD music like the Pono group have basically failed to get traction in the marketplace or even much investment. Thus, the resurgence of vinyl, its the only way to get HD music in a simple and cost-effective way that will also stand the test of time; the equipment and the content will always be available.
Tidal is the one music streaming service that has made an effort in quality, and I applaud them. Spotify is basically 'good enough', Tidal is better, and Pono is above that.
Long term, I believe that music streaming services like Tidal and Spotify are the path to a solution (more than new standalone startups) as they can start slowly in this area, with moderate investment, and improve it and grow it over time. The key factor really would be everyone working together.
But will these companies music companies work together? It seems unlikely. Apple, for example, launched their service at a lower bit rate than Spotify. That makes no sense at all - why go backwards? It suggests that Apple has no real commitment to HD music and this again comes down to the the usual situation with Apple, where the captive audience of Apple users being an easy to market to. Thus, Apple has no pressure to do much better.
Google has such huge size with their brand, and long reach with Youtube. But the confusion with having three services, and weak user interfaces, is matched by their lack of commitment to HD audio. If Google were really serious about HD audio they would have bought Tidal, invested in Pono, and done more for HD audio standards. Google is the one company that could really set the industry in motion toward an HD audio standard, if they were really committed to quality. But ultimately, Google's sheer size and high profits via search spoils them; and will hinder them from truly committing to other markets like music. My opinion is that they just "do stuff' and it kind of works, but not always very well, and thus they never really have that singular, deep focus that is needed to succeed. Google is not 'hungry' to succeed. Google is probably the most disappointing of anyone in the music market right now.
I again will start with praise for Spotify. The brand message is clear and consistent, and the entire image breeds confidence. They are #1 in music streaming and will continue to be so. They hit the 'sweet spot' in each area (UI, quality, and simplicity).
Tidal's branding suffered from an uneven launch, but they have kept up steady progress and I am hopeful that Tidal will continue to grow and be effective in this industry. I am fan of Tidal and hope they commit to true HD audio in the future. Tidal is making an effort to support artists - unlike Google who is going the other way by hurting independent producers on Youtube.
I feel that Google is basically a mess. I don't personally know anyone who is impressed with Google music. The confusion of having three services hurts branding. The huge success of Youtube frustrates Google, I believe, because it is largely not monetized - but having a paid level of Youtube is just dumb. Teens will never pay for Youtube - plus, on the paid accounts the advertising is stripped away so all of those independent producers on Youtube get no income from such pages. This means that Google will hurt these producers. Finally, as many have pointed out, naming the paid-Youtube service "Youtube Red" is not good branding - just do a Google search for the very similar phrase 'red tube', for example and see what comes up.
What is ironic is that the enormous content of Youtube could be used in a productive way, to Google's benefit - but ONLY if they do it the right way. Here is exactly how Google should do its music branding:
In other words, Google could succeed if they made a consistent, funded, and effective effort, that had a very clear branded name (like MusicStreaming.com), a true membership program to reward loyal users, and a long term commitment to bring standardized HD music to the world. This could change the world of music.
Youtube music is a significant differentiator for Google. The URL MusicStreaming.com is another potential differentiator. Finally, deeply committing to HD audio is also a differentiator. Take all of this together, and with a good UI, means Google could become #1 in music.
NOTE: I have praised a few companies in this article (Spotify in particular) - so let me make clear, we are not investors in any of these companies nor beholden to them in any way.
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