Spotify in Israel: Streaming Giant Finds Its Footing a Month After Launch

“We are extremely satisfied by what we are seeing," says the company's managing director for southern and eastern Europe.

Spotify logo is presented on a smart phone screen in Berlin, Germany, 24 February 2018. According to the media, Spotify co-founder Daniel Ek does not want to lose control of the upcoming IPO of the world's largest music subscription service. Investors who want to invest in the upcoming IPO of Spotify, apparently only get shares that give them less influence than Ek.Upcoming IPO of the world's largest music subscription service Spotify, Berlin, Germany - 24 Feb 2018

While international brands such as McDonald’s and Starbucks have struggled to penetrate the Israeli market, Spotify has expressed confidence in its recent entry. And after years of eager anticipation, Israelis are hoping the Swedish company gets it right.

On the back of extensive market research, data analysis, partnerships with local music industry leaders, tastemakers, and a concerted focus on the individual user, Spotify asserts that it has made the essential connections to service a very complex landscape. “We expected success to a certain extent, because there was very high interest before launch, but the users’ reaction has been very supportive,” Veronica Diquattro, Spotify’s managing director for southern and eastern Europe, tells Variety. “We are extremely satisfied by what we are seeing.”

The Italian-born Diquattro leads markets ranging from Turkey to Spain, but rather than replicate strategies in other international territories, the Spotify team took important steps to learn as much as they could about the ways in which music is consumed in Israel. Streaming services such as Apple Music and Deezer had held sway in the holy land, and the go-to for music-loving Israelis has long been YouTube. “Many restaurants and coffee shops still have a computer running an automatic YouTube playlist in the corner,” says Nadav Ravid, manager of Galgalatz, one of the most popular radio stations in the country.

But even prior to Spotify’s March 12 launch, many in Israel were already familiar with the service, in part through the media and word-of-mouth and also via the use of VPN services, or virtual private networks, which allow users to connect to servers in other countries and sample content unavailable in their region.

Still, Spotify faced unique challenges in Israel, namely that the platform had to be compatible with Hebrew text, which is written and read from right to left. In addition, the price point for a paid subscription was key as mobile data packages in Israel frequently cost less than they do in the U.S. and the U.K. The company landed on a fee of NIS 19.90, which equates to about $6 — significantly lower than the $9.99 monthly charge in the U.S. (Israel’s population as of 2018 is just north of 8.8 million residents.)

Curation was another hurdle, so Spotify consulted with Galgalatz’s Ravid as well as other Israeli music industry leaders and hired an editor to focus specifically on the Israeli market. “Every time we open up a new territory, local curation is one of the key points of our offer,” says Diquattro. “We need to make sure that the users are able to find and discover the music that is relevant for them.”

“Starting a Foo Fighters Spotify station in Croatia should be different from starting a Foo Fighters station in Seattle,” offers Ravid. “The mix should be comprised of local artists as well.” In time, he adds, “the system starts to understand people and their personal tastes.”

To that end, editor and user-created playlists like “Israeli Top Hits” and “Israeli Weekend” offer songs sung primarily in Hebrew by popular Israeli acts like Moshe Peretz and Itai Levy, while on the Israel Top 50, Western artists like Drake, Dua Lipa, Camila Cabello and The Weeknd rule, while fewer than a handful of Israeli artists appear, the highest ranking being two tracks by Omer Adam and Netta’s “Toy,” which will compete for Israel in the 2018 Eurovision contest.

While some in the radio industry may view streaming services as competition, Ravid sees a partner. “We have to meet our audience wherever they are — whether on Facebook, Instagram, YouTube, or the streaming services,” he says. It’s why Galgalatz has a dedicated profile with playlists curated by the station’s DJs, all of which link back to the station’s website.

Less than a month after its launch in Israel, Spotify made its debut on the New York Stock Exchange. The service is currently available in 65 markets, including Vietnam and South Africa, and counts more than 70 million paid subscribers worldwide. At close of business on April 17, Spotify’s stock (SPOT) was up 2.89% with a market cap of $26.4 billion.