Spotify is Killing it, and That's a Good Thing

By Mario Aguilar on at

Sony just made PlayStation immeasurably better by ditching its own Music Unlimited service for Spotify, bringing the world's most popular (and arguably best) on-demand streaming service to the word's most popular next-gen gaming console.

Sony Music Unlimited isn't just being shoved aside; it's dead now. It was a middling offering compared to Spotify anyway, so no great loss to you. But it speaks volumes that Sony is willing to give up potentially locking you into its service to give you a better experience, especially given the company's history of doing, well, the opposite. Spotify is just that good.

Spotify is killing it

The move is also just the latest in a long series of signs indicating Spotify's increasing omnipresence. Back in 2003, Shazam, one of the all-time most downloaded apps in the world, opted to support Spotify competitor Rdio exclusively. I remember spending a long, nerd-miserable night trying to figure out how I might daisychain services so that I could generate a Spotify playlist out of the songs I Shazam.

Then, last December, Shazam finally baked Spotify into into its offerings. It worked like magic. Popular app finally shakes hands with equally popular service, and surprise! The multitudes are pleased. Just a month before that, Uber announced Spotify integration as well. Regardless how you feel about Uber, it's pretty cool to be able to pick the music you play in your Uber car automatically. If Uber had partnered with Rdio or some other service? Fewer people use Rdio, and would have benefited from this handy feature.

Spotify has 60 million users, 15 million of whom pony up for a subscription. How many pay to use Apple's Beats Music, Google Play Music, or Rdio? If it was an impressive number we would be told. Spotify is very up front about how many users it has because it's kicking everyone else's arse.

Killing off crappier services is a good thing—for now

I'm all for competition (more on that below) but Spotify killing off weak services and adopting a larger user base is actually a good thing in many respects. Take the Sony example. Sony Music Unlimited didn't offer anything new to anybody, and was substantively inferior to Spotify in every way except that you couldn't use it on your Playstation 4. Spotify wins, and so do the nearly 20 million people who have bought a Playstation.

Indeed, as Spotify becomes increasingly dominant, subscribers are more and more likely to get the Uber- and Shazam-like integrations they want. If there's a scattered market, you run the risk that your service might not be supported within another platform.

On a related note, more users and money give Spotify a stronger negotiating position with the people who run services like Uber and Shazam, as well as with the people who own the rights to the music you want to listen to. Of the latter, Spotify will have the clout and money to demand that artists sign contracts, so that you get the music you want when you sign up. To a certain extent Spotify already does this—that's how they got an exclusive deal with Led Zeppelin. In the future, the next time Taylor Swift has a record, she'll have less incentive to turn Spotify down.

What's more, if Spotify keeps swallowing up the customers from the flailing Sony Music Unlimiteds of the world, you're going to see product improvements that stem from collecting lots of data from people on the same service. The social and discovery features that Spotify uses to distinguish itself will see a boon.

For example, Spotify recently added new playlists that are based on what's trending in your network. The playlists allow you to drill down and see who is listening to what and even how many times they listened to a trending tune. From there, you can choose unfollow your friends who like weak jams, and the system will get smarter about what to serve you with its discovery features. The more of your friends that get funnelled into Spotify, the bigger the sample size you're going to get and the better targeted the music.

A Spotify monopoly sounds scary, but it's never going to happen

Spotify's increasingly dominant position also makes it a potential monopoly, which could lead to exploitation of customers and artists, while also stifling innovation.

You never want to give one company all the power because then it does what ever it wants. If Spotify gets too much market position it'll be able to start charging more money while providing potentially less reliable service. From the artist's point of view, we don't want to get to the point where you have absolutely no choice but to take Spotify's terms, to the point that Spotify can offer whatever terms it wants. Many artists already feel, whether justly or not, that they're getting a raw deal from Spotify. Spotify says it pays out as much as it possibly can, but can we count on the company to be that altruistic when and if it conquers all.

Of the former, much of the reason Spotify has been able to edge out the competition is precisely because it has an incentive to innovate features that make it stand out in a sea of bland products.

But even as Spotify's footprint becomes increasingly giant, it's not not going to shake its toughest competitors. Google and Apple, both have deep pockets and rapidly expanding user bases of their own. And importantly, they've got features to make sure that Spotify doesn't get complacent. Late last year Google beefed up Google Play Music with the addition of YouTube Music Key and made it good enough that I even considered switching. Another example: I think Beats Music's curated playlists introducing you to certain artists are an amazing service that almost makes a subscription worth it on its own.

In the meantime, I think we can revel in the fact that Spotify is taking out some crap competitors and making Spotify a better experience for those that choose to follow its light.