Spotify Must Win Hearts To Grow Subscribers

Guest post by Kyle Bylin of Live Nation Labs.

Spotify, the online music service, has added a free, ad-supported radio feature to its iOS apps, which allows listeners to create and play music stations—akin to what Pandora offers—for as long as they want.

The need for Spotify to develop a radio service, some suggest, stems from its strategy of “attracting users with free, ad-supported services who can be converted later into paying subscribers.” While this may be true, Spotify also realizes that a radio service will allow it to appeal to casual listeners as well as the service’s more avid core users.

The success of Pandora, after all, lies in the simplicity of the service and passivity that it allows. You can click play and let the service do the rest, without the need to engage further if you don’t want to.

By contrast, Spotify’s primary on-demand service requires more work: installing apps, searching for songs, creating playlists and the like. It’s designed for active listeners who want control and access, not those who prefer to click a button and listen to whatever comes on.

But the truth is that many listeners do interact with Pandora, tailoring their experience by giving songs a thumbs-up or thumbs-down. According to the company, users did this over 10 billion times by last year, and such numbers have led many of us—including Spotify—to wonder whether people would be willing to pay Pandora to access to their liked songs. The idea is provocative, but it’s still unclear whether such access appeals to casual listeners.

Herein lies the problem: Spotify wants to attract more users with a radio service, but since these additional users are likely more passive, the company must approach and serve them differently from their core audience if they want to earn their business. But what exactly does it take to convert casual listeners into paying subscribers? Is it Spotify as a service, or is it something more?

When pundits talk about owning music being a better experience than accessing it, they often fail to take into account that most people never owned music to begin with, and that a “personal music library” is largely a fanatic concept meaningful to only a minority of listeners. So when a tech-savvy listener counters by extolling the virtues of Spotify and accessing music, it’s easy to view this “argument” as larger issue, when it’s really a small one.

The digital music revolution and the rise of file sharing certainly encouraged many listeners to hoard as many songs as their discs and iPods could hold, but these are stockpiles, not possessions. Thus, we need to view casual listeners—especially the young and the digital—as people who have never owned much music, and this view should give Spotify some hope of persuading them to use its radio product.

Many, including Spotify rival Slacker Radio, believe that the key to cracking the subscription music sector lies in combining a radio service with an on-demand one, because it allows casual listeners to “like” their favorite songs on music stations and grow a sizable list of them, which one can imagine they would soon want to cue up at will. As interest in doing so grows, such listeners will, presumably, be easily swayed into paying to access their list of favorite songs on demand.

For this happen, however, a listener must take ownership of their music and form a long-lasting bond with it. The amount of time and effort that they invest in Spotify Radio, research suggests, will correlate with how much they value their songs, and before “pride in ownership” can happen, a certain threshold must be passed. Put simply, labor—i.e. listening to and liking lots of songs—is what leads to love, but only if a listener labors enough.

Unfortunately, Slacker, which did combine its radio service with an on-demand one, has proved the potential downfalls of this approach. When you listen to music stations and like songs, they stockpile under the menu option “Favorite Songs,” both on the website and in the mobile app. The result, if you’ve used Slacker Radio for awhile, is an unsightly, seemingly endless artist listing, with only a single song indexed under each, which makes for clumsy and awkward navigation.

“There is a delicate trade-off between effortlessness and investment,” says author Dan Ariely in his book, “The Upside of Irrationality.” “Ask people to expend too much effort, and you can drive them away; ask them for too little effort, and you are not providing the opportunities for customization, personalization, and attachment.”

Spotify shouldn’t just try to recreate Pandora; it must redefine it. Along the way, the service could socialize the fanatic concept of a “personal music library” or entirely reinvent it, but to win hearts, it can’t be all thumbs.