Spotify: Comes With Music's Latest Threat

As I referenced at the end of my previous post, Spotify – the European streaming music service – has struck a deal with UK mobile operator 3, bundling the cost of their premium subscription into the phone tariff.  I’ve done a few press calls on the story today and the recurring question has been “where does this leave Nokia’s Comes With Music”.

 

Although the business model and value proposition are very different in many respects (thus suggesting risk of direct competition is low), there are also many similarities. Both offer unlimited music free to the end consumer, and now both are mobile. The distinctions between streaming and downloading is becoming increasingly irrelevant to end users (though rights bodies will continue to obsess about the distinction). The differences the consumer feels are of course what matters.  Given that CWM and Spotify have comparable catalogue, the key differences between fully subsidized mobile offerings will be:

 

  1. Ownership of the music
  2. Amount of music you can play ‘offline’
  3. The device / service experience

 

The latter is what will really count.  Ultimately what people want from a mobile music experience is something that works well as an extension of their device (compared to a PC centred experience where demands and expectations are higher).  In effect mobile music services have to work well as a feature of the handset. So Spotify and CWM both need to achieve deep handset and operator integration (e.g. permanent home screen buttons etc.) to make the experience feel like an integral feature of the phone experience. If either achieve that, and create a compelling business case for operators, they’ll stand a good chance of success with multiple partners, by being a feature rather than a service.

Comments

re: Spotify: Comes With Music's Latest Threat

MarkI admire your continued believe in the CWM proposition but it's more than likely going to fail:- Nokia offers ownership but owning media is so last century. Why will users bother keeping track, managing and backing up of all their different collections of media when you can just access the whole lot through rental/ad-supported services- Nokia's CMW is too tricky to explain, consumers just don't get it- You are mistaking Nokia for Apple. Just because Nokia's strategy says there are going to copy Apple and remodel themselves into a company that cleverly combines device excellence with content/services doesn't make it so. There's only one Apple and very few other examples of firms that have pulled that trick offSpotify have a real advantage not being tied to any particular platform and rather than deep handset and operator integration (god forbid!), they should continue with their existing strategy of pushing the app to all mobile OS and becoming part of the bundle with as many operators as they busdev guys can handle

re: Spotify: Comes With Music's Latest Threat

I completely agree that Spotify's lack of handset ties gives it strong broad reach potential that Nokia inherently lacks. But I'm not mistaking Nokia for Apple. I'm lucky enough to engage a lot with both companies and I am very conscious of their respective assets and characteristics. You are completely correct to identify that Apple is a unique case. Indeed we spend a lot of time at Forrester explaining to clients why they should not build strategies based on the 'well it's worked for Apple' principle.Few companies have made the closed loop ecosystem work beyond Apple, the games consoles and perhaps Amazon. It requires huge vision and excellent implementation to make it work. Done wrongly it simply feels like a restrictive ghetto. The risk is that that is where CWM could end up heading unless key issues are addressed.