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Spotify Continues Its Offensive Against Apple Music

By Andrew Tonner - Sep 18, 2015 at 3:01PM

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As Apple Music heads toward the end of its initial post-launch trial period, Spotify says it continues to set new records.

Source: Spotify.

At last week's iPhone 6s event, Apple (AAPL -1.92%) skipped the traditional updates it usually provides, perhaps because -- and this is my own speculation -- of a possible lack of success with its recently launched Apple Music service.

Long billed as a possible killer of privately held Spotify and Pandora Media, Apple Music launched in June and by all accounts enjoyed massive initial interest from users. However, Spotify quickly answered Apple's challenge by rolling out a number of new features aimed at halting Apple's attack before it inflicted any meaningful damage. And in extending its counterattack narrative, Spotify recently unveiled another weapon in its growing features war with Apple.

Spotify continues its Apple Music counterattack
Last week, Spotify unveiled Found Them First, a new feature largely catering to its trendsetting users. The tool works by scanning a user's listening history and compiling recent breakout artists he or she identified before these acts went mainstream. Aptly described as "a music snob's dream come true," the service defines users as early adopters if they were in the first 15% of Spotify members to stream a song from a given artist. Additionally, an artist or act must surpass over 20 million total streams and experience over 2,000% growth in total plays over the past two years to qualify for Found Them First. And while this feature doesn't meaningfully shift the balance of power in on-demand streaming, it certainly reiterates Spotify's recent product momentum in the wake of Apple Music's launch.

Source: Apple.

Beyond Found Them First, Spotify has introduced several additional features that have helped thwart Apple's initial user-acquisition strategy that focused heavily on new music discovery. In no small part because of Spotify's sluggishness in building out its own song-discovery features, Apple Music's initial product and marketing strategies leaned heavily on its ability to introduce users to new music. Apple opted to center its efforts on human curation and radio, having hired a healthy number of the music industry's top tastemakers over the past year. However, Spotify quickly launched two new machine-learning-powered features that largely remedied this key product shortcoming: Discovery Now and Fresh Finds. In addition to its own rollout of curated playlists, Discovery Now and Fresh Finds also supply users with plenty of new content, which has clearly helped Spotify evade the possible competitive threat from Apple Music.

Spotify unaffected by Apple Music
Spotify co-founder and CEO Daniel Ek talked down any Apple threat at a recent event in Toronto organized by Canadian telecom carrier Rogers Communication. Per reporting by Bloomberg, Ek described Spotify's progress in the wake of Apple Music's launch, saying, "We keep setting new records week by week."

I've gone on record in the past predicting Apple Music might experience a more challenging time-stealing market share from Spotify as legitimate "switching costs" exist with the on-demand music service. Users often spend hours collecting and categorizing music on their service of choice (I certainly do). And say what you will about the logic here, but the prospect of attempting to re-create the scores of playlists and album downloads I've collected on my Spotify account seems like more pain than it's worth. And although I cannot say anything with near-complete certainty, I imagine plenty of other Spotify users would agree with that sentiment.

In having examined and used the service repeatedly during the free trial period, Apple got far more right than it got wrong with its Music service. But timing also matters in markets and Apple showed up late to the on-demand streaming party. So, while Apple will assuredly continue to pursue Spotify's leadership in the on-demand music space, all current evidence suggests that Spotify is no worse for the wear after Apple Music's launch.

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