Spotify's purchase of music intelligence firm Echo Nest is company's latest lay to develop a sure thing
It’s about the data and the footprint.
In other words, the more information you have, the fewer mistakes you make, and if you’re America-centric, you’re gonna get your butt kicked by those who see the entire world.
The music business did not see the technologists coming, and so they’re still having their lunch eaten by people who see a future they cannot.
Like Spotify founder and CEO Daniel Ek. I’m not saying Ek is a ripoff artist hoodwinking the labels; he’s got to play fair, because he needs their licenses. But living in Sweden, where the Internet connection is screaming, and growing up in the land of tech, he just sees things a bit differently.
Ek told me Amazon would be profitable if it didn’t spend $3 billion in China and $2 billion
on entertainment rights. He gave me that perspective when I asked him about the profitability of Spotify.
If Amazon were interested in satiating its critics, it could stop spending on tomorrow and deliver the numbers everybody wants today, but it might not triumph in the future — and it’s all about triumphing in the future.
Spotify is in so many countries around the world that you’re probably unaware some of them exist. It’s not in Japan, where people subscribe to rental kiosks, wherein they bring the CD home, rip it, and return it for another. But there’s no music on YouTube in Germany, so Spotify subscriptions are huge. And in Scandinavia, more than 10% of the population is paying for the service.
So Spotify wants to be in Japan — and China, and India. But it already has most of the major territories covered, so profitability is imminent. Then again, there’s constant reinvestment in the product to make sure it doesn’t hiccup — to make sure it delivers what you want. People rarely tolerate bugs anymore. They expect something to work, right away and forever.
Spotify never launches a product that fails, because it’s tested it long before it launches. Up to 150,000 users might be employing new features without knowing it. So by the time Spotify rolls the feature throughout the world, the company knows it’s going to gain acceptance; it knows it’s going to work. Kind of like the free mobile access it launched in December, when it had more sign-ups in one month than it did in the previous 11.
While the record labels are still dependent upon CDs, Spotify is multiple steps ahead.
Spotify’s vision is to have your music follow you everywhere, so it can be called up with the touch of a button. It’s part of Apple’s CarPlay. And Android’s automobile play, too. Spotify is platform agnostic. And over the course of this year, its chips will be embedded in many entertainment devices, so that your boom box or Sonos speaker will know what you were listening to last, and will play it on command from your phone, streaming directly from the Internet, or wherever you are.
Ek is building a service so good you’ll want to pay for it and not abandon it. That’s why it purchased music data company the Echo Nest on March 6, for a reported $100 million. It’s about predicting what people want to listen to. And Echo Nest, founded at the MIT Media Lab in Boston, does just that.
So techies have taken over the world. That’s the story of this decade. The aughts were all about the freak-out, the disruption, the casting aside of the baby boomers who believed it was about going to lunch as opposed to accumulating knowledge.
But now it’s all about tools, and he who has the best wins.
So if you want to know what’s going on, a meal with expensive wine tastes good, but you’re probably gonna learn a lot more by lunching with the techie in the T-shirt.