In a frank and concise interview with Hollywood Reporter, Spotify founder Daniel Ek volleys a series of questions about his competitors. Naturally, one of the queries was about Beats Music, which launched publicly this week. Ek was plainly denigrating, citing the Beats formula of celebrity music curators as “slapping some celebrity brand on it and hoping it will be good.” Yikes; that seems harsh, and definitely over-simplified.
Ek believes that streaming music is still in early days, and that the U.S. market is not yet largely tuned into its benefits. “People here have just figured out Pandora in the last 12 months, and that service has been around for 13 years.” That’s not true in the way Ek intended. Pandora’s Music Genome Project began in 2000, but the public-facing service, the only way by which users could experience the Genome as Internet Radio, was started in July, 2005 — so, eight and a half years of consumer discovery time.
Hollywood Reporter asked Ek whether Spotify is considering acquisitions — a good question, especially considering recent $250-million funding. Ek replied that the market will never boil down to just one company, but: “Eventually, is it better to have a few consolidated players? Probably.”
Perhaps Ek’s most interesting remark does, in our opinion, differentiate Spotify from Beats. “We are a social service,” Ek remarked. “We are a product company.” That is a meaningful distinction.
People think of “product” as impersonal, and in the music service business, impersonal means algorithms. It is exactly that perception that Beats Music is pushing back against to define its marketing and its competitive stance — the Beats product. The social aspect is weak in Beats, and is a strength in Spotify. As a discovery and collection platform, Spotify is stuffed with user value, not least in its embedded app ecosystem, which is not discussed enough when comparing brands. In Beats Music, despite some product foolishness (e.g. the absurd artist selection process) and the technical problems this week, those high-profile curators are developing truly interesting content that cannot be replicated.
So: Daniel Ek is correct to be confident in Spotify’s ability to swim strongly in the competitive currents. But Beats Music is a worthy competitor that is effectively distinguishing itself from the start. Neither brand will fade fast.