Spotify Reaches 40 Million

The best thing that ever happened to Spotify was Apple Music. Competition lifts all boats. Which is why malls have two anchor tenants, two department stores.

But that was back before malls cratered and turned into festive dining areas that feature shopping as a sport, if the mall hasn't closed completely.

We live in the streaming era. Who's going to win?

The uninformed and uninitiated would bet on Apple and Google. But it appears the former has hit a ceiling and the latter is moribund. Spotify is adding twice as many subscribers than Apple per month. Spotify is adding 1.7 million, Apple, 875,000. Spotify has 40 million paid subscribers and Apple 17. So the two-thirds rule still applies, or close to it.

That's right, online, one outlet ends up with two-thirds of the market. There are always people who won't shop at the big kahuna. Google has about two-thirds of search and Spotify's got nearly two-thirds of streaming music subscriptions. As for competitors...Napster and Deezer, they're sideshow also-rans with acolytes who will eventually migrate to the big two just like Beta users went to VHS.

The final chapter has not been written. Amazon has a play here. We heard that Apple had everybody's credit card number, that can't compete with Amazon's 63 million Prime subscribers. There's an offering here that might work, but maybe not. Maybe Spotify was just too early and kept on improving.

Yes, Spotify had first mover advantage. There were streaming services before, but none with a free tier. Not only did the free tier cause conversion, it begat buzz, people started talking about Spotify.

But then, when Apple illustrated to everybody that streaming was here to stay...

Spotify innovated.

This is what is hurting Apple in general. This is the story of the iPhone 7, which never should have come out. Remember when the iPhone migrated to Verizon mid-cycle? Apple extended the cycle, kept selling the 4... Because you don't want to screw your customers, you couldn't eclipse the purchase of Verizon users six months later. Sure, the bottom line would have taken a hit, but if we got the iPhone 8, with an OLED screen and other innovations in January or March, all would be forgiven. Never forget, Apple was late to CD burners, music software and music players. But then it won with its Rip/Mix/Burn campaign and the iPod. Better to get it right than to alienate your fan base.

And Apple Music was a disaster in functionality. When every other service was better, even the now defunct Rdio, which was purchased by Pandora. In today's marketplace you don't get a second bite at the apple, you don't get a second chance to make a first impression.

Discover Weekly put the stake in the heart of Apple Music. Music discovery was supposed to be Jimmy Iovine's domain. He testified he was gonna fix it, using real people, but then the algorithm came along and beat him and...

Then Spotify came up with Release Radar, a way to discover brand new music. Apple not only did not have a similar product, whatever products it is coming up with are locked behind a paywall, so those who checked the service out once are now completely unaware, and don't care.

So, competition heated up adoption, but there was a war between Yahoo, HotBot, AltaVista and Google once upon a time. And Buy.com was competing with Amazon. Turns out one player pulls out from the pack, and competing after the fact is impossible. Bing is a disaster, a great percentage of its market share was purchased, but it's still got a de minimis percentage of search and the losses are legendary.

Apple took its eye off the ball. Stayed with files for far too long. It's a chapter written right out of Clayton Christensen's "Innovator's Dilemma." He not busy being born is busy dying. If you're doubling-down on your edifice instead of knocking it down with the wrecking ball, your business is time-stamped.

Which is why Apple so badly needs a new product in a sphere within which it can dominate. MSN could never topple AOL and Apple will never beat Spotify, never.

So, what have we learned?

Never bet on yesterday's giants.

Functionality is everything.

Innovation is key.

And products grow when there's a light shined upon them. All this anti-streaming nonsense is just keeping you broke. Never forget the cell phone business, it burgeoned when prices fell through the floor and everybody played. When everybody's talking about streaming music...

Spotify will be even bigger.


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