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The Money & Music Behind Spotify

With the buzz of their coveted release of “Spotify Wrapped 2020,” Spotify has been trending across all socials for the past week.  Spotify has become pop culture.  Since its start, Spotify has been this cultural and technical phenomena in the media industry.  Founded in 2006 by Daniel Ek, Spotify began as a user-to-user music distribution platform, at the forefront of taking an unruly market of pirated file sharing and transforming it into a constant global revenue stream.  To date, Spotify is available in over 60 countries with the digital variety of mobile and desktop applications.  As of 2020, The New York Times reports 286 million users.  

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When users open their app or load their website, Spotify greets users with the slogan: “Listening is everything: millions of songs and podcasts. No credit card needed.”  This slogan reaches at the core of Spotify’s identity and representation.  However, how did Spotify come to represent this?  What do they want to represent as?  Is Spotify a tech company, like their CEO Daniel Ek insists, a media company, like economists are debating, or a music company that has fostered a community of artists and listeners?  These questions of identity and representation are at the core of this larger concept called the circuit of culture.  Although created in 1997 to study the likes of the Walkman cassette player, these theories still help to foster a contemporary discussion and study of Spotify to gain greater focus and direction.  The circuit of culture suggests that in order to understand how elements of culture (sites, texts, practices, objects, etc) work, one must think of the ways they are constructed and relate to one another by analyzing how these elements function in terms of representation, identity, production, consumption, and regulation.  The structure of the circuit of culture helps to rationally and analytically predict Spotify’s next moves by truly understanding everything they identify and represent. 


An analysis of identity and representation starts with understanding: what is the app?  Spotify allows users to listen to music from across the world from the past to present to browse, search, curate, share, and collect music.  Spotify is not just a radio source, it allows listeners to choose any track at any time within subscription level playback limits.  Spotify has a very flexible paywall structure.  Their most popular option includes a recent deal with Hulu in which college students can receive Spotify Premium and Hulu streaming for a total of $4.99 a month.  This payment option indicates who consumes the product, a target market of millennials and Gen Z users.  

Alongside its unique paywall structure, the app offers a wide range of personalized options that have truly revolutionized music streaming experiences — first, are their personalized playlists.  Created from complex algorithms that have taken years to perfect, Spotify curates playlists based on a user's past and most popular listens and takes this data to make a variety of playlists like “Discover Weekly” and most recently released “Spotify Wrapped 2020.”  These playlists help users discover new music and remember old ones and, because they’re so specific, help foster a close relationship between the company and their users.  

A recent feature added by Spotify is Spotify Session.  Spotify Session allows users to start a “listening session,” no matter the geographical distance between users, and queue and listen to music in sync, as if they were in the same room — quite a relevant and useful feature in terms of social distancing being the new normal.  


Spotify is not only fostering this intimate music listening experience through their relationship with users but also through the relationships between listeners and artists.  On Spotify, artists can see what playlists their songs have been added to, humanizing a transaction of art that can sometimes lose its intimacy in the digital world.  Rebecca Black recently commented on this feature when analyzing playlists that included her most popular single “Friday” in a comical TikTok video.  These features all help to paint this colorful and intricate picture of the app to demonstrate its diverse offerings, however, one specific feature of Spotify remains the holy grail: Friend Activity. 


Only available on desktop, Friend Activity allows users to see a play by play of what their friends are listening to.  Because this feature is live, it feels like an open dialogue between a user and their followers as they can find new music while also deducing what a listener's current mood or activity is.  This feature is so addicting because it feels like a social platform.  This feature has gotten such positive user feedback that blogs have dedicated to recreating what the feature would look like and function as on mobile, whether as a “story” feature or a completely new tab.  


On Spotify’s user feedback forum, user MarcoMontana4 asked on June 17, 2015 if Spotify intended to add Friend Activity to mobile.  Spotify curtly responds with “no” — it is just not their current priority.  Through the years, more and more users have been requesting this feature and Spotify responds with the same teasing “no.”  Therefore, this begs the question, why would a company focused on their user relationship reject the exact thing their users have been demanding for over five years?  

In order to understand why Spotify is doing what it does or, in this case, not doing what it should, it is a question of identity and representation.  Although the Friend Activity feature seems relatively small in regards to the numerous offerings of the app, it helps to focus and navigate conversations of the circuit of culture within the vastness of this app.  Therefore, the answer is found in an analysis of Spotify in the context of being a media, tech, or music company.  

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When Daniel Ek, Spotify CEO, and Martin Lorentzon founded Spotify in 2006, it was not for some idyllic passion for the music industry or a heroic need to save it from piracy, all stories romanticized in the media, but to create a purely technical platform for “media distribution based on a peer to peer network.”  In 2012, Head of Marketing at Spotify Sophia Bendz reaffirmed Spotify’s tech company status as Spotify is only distributing content produced by others.  The company clearly asserts that they are a tech company, however, amongst academics, Spotify is represented and identified differently.  

In the scholarly article “The Spotify Effect: Digital Distribution and Financial Growth,” sociologist Patrik Aspers defines a media company as “a set of markets, one of which is the core or leading market, and to which other markets are auxiliary.”  Under this definition, Spotify is a media company because of its ability to fold markets into each other: “to make disappear an aggressive financial growth strategy and business set-up based on ad tech engineering by creating an aura of “Nordic cool” and public benefit around its use of music.”  Other academic works support Spotify’s media company status as they see Spotify as a digital broker rather than solely offering tech services.  Therefore, in financial terms, Spotify is a traditional American media company.  This status of media versus tech discourse is not mutually exclusive to Spotify.  These answers to questions of identity and representation are important as they directly relate to regulation: based on “what” the company is, they can operate outside of the legal and regulatory frameworks established for that “what.”  Therefore, the likes of Facebook and Apple make sure to solidify their image on terms they want to abide by.  VP of Global Marketing Solutions Carolyn Everson insists that Facebook is not a media company as she equates media companies with content creation.  Apple reinforces this idea by insisting that “we’re not a media company,  We don’t own media.  We don’t own music.  We don’t own films or television.  We’re not a media company.  We’re just Apple.”  Therefore, in the plain words of these big named companies, if a company is not producing content, it is not a media company.  Spotify is then a tech company, as they insist. 

Now it is important to come back to the original question: why is Spotify not adding Friend Activity to mobile?  The answer is in the money.  In an article written this past October, Forbes Magazine reports due to slowing premium subscriber growth, losing market share to competitors, and growing costs on account of exclusive content strategy building, Spotify’s ability to reach profits, already quite meagar, will not be sustainable or establish significant growth.  Although Spotify was making headway in their financial reports from the later 2010s, Wall Street Journal and The Guardian economists report that Spotify was never gaining sufficient ad revenue as “subscription-only models have not yet proven scale and free user models, whilst scaling, have not proven a path to profitability.”   Therefore, Spotify needs to make money.  Seeing as they don’t see themselves as a media company, they are not pursuing the typical pattern of vertically integrating content creation to up profits, as seen in the likes of Netflix, Hulu, and YouTube with their Originals series.  Instead, Spotify is finding their margins in a more technical approach: podcasts.  

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Lydia Polygreen, Gimlet Media’s new Head of Content, recently told Vox this past November that her parent company Spotify plans to turn music listeners into devot podcast listeners.   In the past year, Spotify invested nearly $500 million into their podcasting efforts.  In their recent acquisitions and deals with the Ringer, Gimlet, Megaphone, and, most controversially, Joe Rogan, Spotify made their reprioritization to podcasts quite public.  On their interface, the Spotify app has brought podcasts to their personalized playlist through new features like “Daily Drive,” a personalized playlist that includes a combination of music and podcasts based on a users listening habits and taste, replacing the AM/XM/FM structure of radio listening and commuter entertainment as they are providing greater content variety and play autonomy.  Although Spotify’s features as a whole are tailored to mimic those of major social networks, they are not looking to become a media company, they see their end goal in tech.  

Let’s run it back to Spotify’s slogan: “listening is everything.”  Spotify prides itself on pioneering a whole new approach to music listening, user experience, and online community building.  However, Spotify is just not listening to its users because it is a tech company, and tech companies don’t listen.  Spotify is playing a numbers game and therefore, their priority lies in podcasts.  This push to podcasts has solidified their identity and representation.  So, if users really do want Friend Activity on mobile, they might have to make that feature themselves, and maybe listen to some podcasts to stay busy.   

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