Please ensure Javascript is enabled for purposes of website accessibility

Spotify and Samsung Are Teaming Up to Take on Apple

By Evan Niu, CFA - Updated Aug 14, 2018 at 3:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Swedish music-streaming leader is doubling down on its strategy of ubiquity and platform agnosticism.

Last week, Spotify Technology (SPOT 1.31%) and Samsung announced a new partnership in which the music-streaming leader would become the new "go-to music service provider" for Samsung devices. In no uncertain terms, the duo is looking to better challenge Apple (AAPL -2.46%) on the respective fronts where each company competes with the Mac maker. The announcement was music to investors' ears, as shares jumped 5% following the news.

Here's why the partnership is a perfect fit for both Spotify and Samsung.

Daniel Ek on stage with a green background and the Spotify logo

Spotify CEO Daniel Ek speaking at the March 2018 investor day. Image source: Spotify.

Spotify is everywhere

One of Spotify's greatest strengths as a service is its ubiquity, which is facilitated by a diverse range of third-party hardware integrations as well as a platform-agnostic model. Being able to access the music-streaming service on just about any device -- from smart speakers to mobile devices to gaming consoles to cars -- a premium subscriber might own adds a whole new level of convenience and strengthens Spotify's value proposition. In contrast, Apple Music is only available on Apple hardware and Android phones.

"We know that listeners stream different kinds of music at different times, in different places, and most importantly, on different devices," Spotify CEO Daniel Ek noted in a statement. "We think music should be easy to access on ALL of your devices -- and we want it to be seamless to switch from one device to another."

The deeper the integration, the better the experience. Seeing as how Samsung is one of the most prolific consumer hardware makers in the world, the partnership will dramatically expand Spotify's reach while enjoying deep integration across devices, including Samsung's virtual assistant Bixby and its new Galaxy Home smart speaker. You'll soon even be able to access Spotify on your Samsung smart refrigerator, if you're into that sort of thing.

Samsung has never been good at music streaming

For years, Samsung has tried to break into the music-streaming space with little to no success, like with its oddly named and since-shuttered Milk Music service. The South Korean conglomerate has also tried using Alphabet's Google Play Music as the default music service, but Samsung has a long history of trying to reduce its reliance on Google, seeing as how the search giant already provides the operating system that powers its most popular devices.

It's also not as if Google has made much of a dent in music streaming, either, having rebooted its own strategy numerous times, including just a few months ago. By partnering with Spotify, Samsung is alleviating the pressure to develop its own music service, instead outsourcing music streaming to one of the dominant players.

The overall market is growing

Apple recently overtook Spotify in the U.S. music-streaming market, which could add a sense of urgency for Spotify. On the last earnings call, Apple CEO Tim Cook reframed the competition as one where a rising music-streaming tide lifts all service providers:

But really, the key thing in music is not the competition between companies that are providing music, it's the -- the real challenge is to grow the market because if you add everyone up that's providing subscription music today or streaming music, it's -- outside of China, it's less than 200 million probably around the world. And so it does seem to me, there's an extraordinary opportunity in that business to grow the market well.

The overall market for music-streaming subscribers is indeed growing, but the competition to grab those subscribers is only going to intensify.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Spotify Stock Quote
$105.77 (1.31%) $1.37
Apple Inc. Stock Quote
Apple Inc.
$137.35 (-2.46%) $-3.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.