“Music for Every Mood”: Learn how these “Marvels” created and built a multi-billion dollar streaming platform!

Monday: MicroBusiness and Marketing Marvels FROM THE DESK OF MILES EVERSON: Happy Monday, everyone! I hope you all had a good weekend. Let’s begin the week by delving into the insightful journeys of extraordinary individuals in marketing and business. Today, we’ll highlight the founders of this popular streaming platform! Are you ready? Continue reading below. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

“Music for Every Mood”: Learn how these “Marvels” created and built a multi-billion dollar streaming platform! With over 100 million songs and six million podcast titles in its library, Spotify is recognized as the go-to audio streaming platform for music fans around the world. Since its launch in 2008, the streaming platform has accumulated more than 615 million users, with 239 million of them subscribing to the service in over 180 markets. Needless to say, Spotify has cemented itself as one of the market leaders in audio streaming. To understand the secrets behind this success, we need to take a closer look at the people who created and founded the platform. Their names? Daniel Ek and Martin Lorentzon! Born in Sweden in 1983, Ek displayed an entrepreneurial spirit at the age of 13 when he started designing websites for businesses. Ek pursued an engineering degree at the KTH Institute of Royal Technology before dropping out to focus on his career. Afterwards, he served as the Chief Technology Officer of browser-based game Stardoll before he established Advertigo, an online advertising company that was sold to TradeDoubler in 2006. On the other hand, Lorentzon, born in 1969, has a background in economics and business. Before his tenure at Spotify, he co-founded Tradedoubler, a global affiliate marketing network and provider of performance marketing and technology. Founding Spotify During the early to mid-2000s, music piracy was extremely rampant due to the prevalence and popularity of peer-to-peer services that allowed users to download songs illegally. Of course, there were legal ways to listen to music such as buying physical copies or buying from digital storefronts like iTunes. However, these solutions weren’t enough to stop people from using peer-to-peer services. Through this method, users were able to listen to music on demand since all they had to do was download the songs they wanted on portable music devices or phones. Besides, back then, if someone wanted to stream music legally, he or she would have to buy songs or albums individually, making it an expensive endeavor. Having realized this, Ek came up with an idea to create a platform that enabled users to stream music legally and conveniently. In his mind, the best way to combat piracy was to provide a service that was better than illegal alternatives. More importantly, Ek wanted to create a service that compensated the music industry as well. To turn his vision into reality, Ek partnered with Lorentzon, leading the development of Spotify. According to Ek, they came up with the name when he misheard a name shouted by Lorentzon. Later on, the two combined the words “spot” and “identify” as the name for their project. Officially launched in 2008, Spotify offered music fans with free and premium subscription tiers. For the latter, users were able to listen to music without ads. The platform quickly gained popularity in Europe before expanding its services to the U.S. in 2011. By enabling listeners to stream music whenever and wherever they are, create playlists, and discover new songs and artists, Spotify was able to attract a large user base and address the issue of music piracy. At present, the streaming platform is a dominant force in the streaming industry because of its user base. It also has a market capitalization of USD 60 billion. So, what are the lessons we can learn from Ek and Lorentzon? Identify Unmet Customer Needs Ek and Lorentzon were able to create a platform used by many because they identified a pain point that LOTS of people struggled with. Once they did, they created a solution that addressed these needs effectively. Fulfilling an unmet need is key to creating a successful product. However, it’s not the only thing you have to look out for. Prioritize User Experience and Leverage User Data in Product Improvements Having a great product or service means nothing if users have a hard time using it. Spotify became a popular service because of its snappy user interface, personalized playlists, offline listening, and high quality audio. Aside from prioritizing user experience, Ek and Lorentzon have put an emphasis on continuous product improvements as well. Simple actions such as searching, listening, skipping, and saving to libraries allowed Spotify to create a “taste profile” for its users. This enabled the platform to provide recommendations that are relevant and unique to each listener. Simply said, Ek and Lorentzon utilized insights derived from user data to give subscribers and listeners better experiences when listening to music on the platform. Identify and Utilize a Profitable Business Model To make Spotify profitable, Ek and Lorentzon decided to make use of a “freemium” business model. For those who may not be familiar, this is a type of business model where basic features of a product or service are offered to users at no cost. Customers are only charged when they opt to use advanced features. By using a freemium business model, Ek and Lorentzon were able to grow their user base… and from this pool of users, there was a sizable chunk who opted in for Spotify’s premium service. There you have it—the secrets behind Spotify’s success! — Ek and Lorentzon’s journey is a testament to the power of out-of-the-box and data-driven thinking in marketing and business.Their ability to find a customer pain point enabled them to create a platform almost everyone has heard of and used. Truly, Ek and Lorentzon are “Marketing Marvels” in a world where it is so difficult to attract and retain customers. So, as you navigate the challenges modern marketing has to offer, use the insights you learned from the founders of Spotify! Who knows? These lessons just might be what you need to supercharge your marketing or business career! Hope you’ve found this week’s topic interesting and helpful.     Have you ever bought something because the salesperson or the marketing for that product promised it would do for you what you wanted or needed (e.g. grow your hair, remove your belly fat, strengthen your immunity, etc.) in X number of days? Learn more about an important marketing lesson from a particular movie in next week’s article!