Designing Spotify
Taking a service design approach to business positioned this company to maintain a competitive advantage against music industry incumbents and new entrants
Spotify knows what you like.
Most people simply refer to this as “the algorithm”, a ghost in the shell that takes note of your tastes and serves you music that fits your many moods. It feels like magic.
It’s not.
The design team at Spotify Design uses a Service Design process to co-construct a meticulously designed ecosystem, one where each facet, each experience, is intentional. A service design framework strengthens the design team’s ability to work under pressure and make critical decisions that matter. It is a service design approach, coupled with a deep understanding of user needs and behaviors, that serves to elevate the product and set it apart from its competitors.
Spotify takes a “design first” approach to business. In the words of Katie Koch, Senior Design Manager for Spotify in Stockholm, this means: “We (Spotify Design) use service design as a tool to attain the highest quality of shipped experiences within the timeframe available. We think of our product as a service with many user touchpoints spread out across time and contexts, and we’re able to use the tools of service design to make an otherwise invisible service feel tangible.”1 One such touchpoint taking into account time and context is the “Discover Weekly” playlist. A main value add for many Spotify users, “Discover Weekly” is a consistent source of excitement and anticipation that keeps users coming back to the platform every week to hear new music. This playlist is curated by Spotify based on listening history, and an “affinity score” that is given to each artist. This affinity score rates how likely it is that any artist is central to your taste in music. The algorithm simultaneously finds other users who have built similar playlists to yours and finds songs you may not have heard. In combining new music with an “affinity score”, “Discover Weekly” serves content that feels intricately personal and borderline magical.
Music taste is something built over time. It is born of experimentation, coming of age, of time with family, or more importantly, friends. It’s a human experience. An experience we collectively appreciate and individually pursue. Perhaps this is why the “Discover Weekly” playlist feels so intimate. To so accurately represent someone’s taste is to understand them as a person. This is where Spotify succeeds.
Across all touch points of the user journey, Spotify provides a deeply personal experience, one that anticipates needs and serves content rooted in behavioral insight. For the “Discover Weekly” playlist, the behavioral insight is: finding new music you enjoy is as important as listening to songs. It takes a mixture of service design and deep understanding of the user base to design a service that takes advantage of this insight.
How does a “design-led” approach translate to competitive success?
Competitively, number’s speak louder than words: Spotify has grown their user base from 38 Million users in 2016 to 138 Million users in 2020, a stark increase compared to the competition.
There are many factors that contribute to this market success, including being the first entrant into the streaming space with substantial record label deals. If we take a Porter’s Five Forces analysis of the music streaming market from the POV of Spotify, they’ve been competitively successful for a few reasons:
Competition in the industry, although high, will not knock Spotify off of its throne. The ethos, vision, and design of the product and organization create valued premium and free members for life.
Threat of new entry is low. The resources needed to develop a streaming application that competes with the likes of Spotify would be incredibly difficult to secure. Furthermore, the market is dominated by large players (Apply Music, Pandora, Soundcloud, Amazon Music etc.)
The power of suppliers (artists) is low. Artists usually have significant bargaining power. In a traditional talent-led market, the larger the artist, the larger the bargaining power. However, partnerships and contracts with record labels secure music rights for years at a time, much to the distaste of artists who are not receiving the royalties they deserve.
The power of the customers is significantly low, given the high user base. Spotify can change the premium price of the product and not risk losing too many subscribers.
Threat of substitutes is low. Once a user begins collecting music and collating playlists on a streaming platform it is a major hassle to transfer those playlists to another service. There are third party applications which specialize in this process, but they are not 100% accurate. Further, there is no streaming platform that provides the level of personalized content Spotify does.
It is clear that industry rivalry is the most pressing issue. Apple Music has caught up, and surpassed, Spotify’s user base in the United States.2 Spotify remains on top in Europe and South America, where the Apple ecosystem is not as dominant. Furthermore, with Apple’s release of audiophile quality sound at 24-bit/192 kHz, and lossless/spatial audio, the decision to purchase Spotify is becoming more difficult for new users. To maintain growth and elevate it’s strategic position, Spotify must continue to design services that deeply understand the motivations of customer behavior, and simultaneously compete with the innovative product offerings brought to market by its competitors.
https://spotify.design/article/using-service-design-to-create-better-faster-stronger-designers
https://www.businessofapps.com/data/apple-music-statistics/