Spotify Is Wrong To Not See Pandora as a Competitor
Lots of interesting stuff in Spotify CEO Daniel Ek's new interview with the Hollywood Reporter: He disses Beats Music, fights back against Thom Yorke's slam of Spotify (and of streaming royalties in general), and again defends the fact that Spotify isn't turning a profit. But maybe the most interesting -- and to my mind, wrongheaded -- part of the interview is where Ek talks about Oakland's own Pandora, the Internet radio service:
I don't really view them as a competitor. The rest of the world seems to, for some reason. We want Spotify to be your music player. We don't want to be the radio service; we don't want to be the place where you watch a music video and then a cat the next moment. We want to be the place where you store and collect, where you build your playlist for your dinner party or your workout. That is very different from Pandora.
Here's the problem with this: I don't think the average consumer cares or even necessarily wants to have to distinguish between a "radio" service like Pandora or "store and collect" service like Spotify.
That difference grew out of the early days of the music streaming industry, but there's no good reason it will last. Ultimately, consumers will want both: to create playlists and store a defined collection on one hand; and to have the ability to just turn on some music, a la radio, on the other. Lots of Spotify's competitors, like Rdio and the new Beats Music, get this, and have built features accordingly: Rdio, which I happen to use, can automatically generate a radio station based on your music tastes, and Beats Music has several cool features designed to play music you'll like without you having to choose it. (I haven't tried Beats so I can't comment on its effectiveness, but some critics like it.)
Pandora, of course, started this whole anticipate-your-taste thing. And in my casual observation, it seems many people use both Pandora and a streaming library service like Spotify or Rdio, not one or the other. (And if they do use just one, it's usually Pandora.) In the same interview, Ek dismisses Americans' use of Pandora: "People here have just figured out Pandora in the last 12 months, and that service has been around for 13 years." This sounds fanciful and overly dismissive in my (admittedly anecdotal) experience -- I know lots of non-early-adopters who have used Pandora daily for many years. The numbers would seem to bear this out: Sweden-based Spotify, according to THR, has 24 million users. Meanwhile, Pandora has 70 million active users just in the U.S. -- and more than 200 million registered users total.
Non-music-nerds tend to appreciate a service like Pandora that will play music they like without them having to discover it, type it in, and click on it. So if you want to build a market-dominating streaming company, wouldn't it seem wise to build one that attracts both them and the find-and-collect crowd?