This week, Spotify and Apple Music activated their first unofficial mixes, making them available for mass consumption. This new feature comes after the two music streaming giants inked separate agreements with Dubset, a music rights management company tailored to DJs. For both companies, this is a step in the right direction, one toward becoming fully fledged platforms.
Spotify, which debuted in the US in 2011, has never truly functioned as a platform prior to this latest development. While the Swedish streaming service did utilize many platform tactics successfully, it still licensed its content from record labels rather than sourcing the content directly from the artists. Despite its incredible growth and exciting features, Spotify's failure to develop a platform business model in its earlier days left the door open for other streaming services to take off and thrive, as well.
However, one key component of its service does and has always served as a platform: playlists. Spotify kicked things off by curating stacks of tracks that suited genres, moods, and occasions, strongly encouraging its users to make, share, and publish their own playlists, which served to differentiate the company against its competitors. At the time, no other streaming service offered such a collaborative feature and could do it without noticeable wait times for buffering.
Despite the viral nature of its playlists, Spotify, at its core, still wasn't a platform business and that disabled it from conquering the streaming marketplace. A true music streaming platform did emerge in the form of another company with German origins: SoundCloud, which allows registered users to post their own music and mixes. Estimates place SoundCloud's monthly active users around 200 million, but the company has struggled to monetize and hemorrhages money on a regular basis. By contrast, Spotify has a base of roughly 100 million monthly active users and a solidly built subscription model with nearly 40 million participants.
Recently, rumors have swirled that Spotify is in late-stage discussions to acquire SoundCloud, a move that makes sense for both players, since SoundCloud's premium service (SoundCloud Go) has failed to deliver and Spotify is eyeing an IPO for next summer. SoundCloud gets an escape from their fiscal woes and Spotify can capture and integrate a thriving network of listeners and creators, ballooning their user count and melding a platform with their successful monetization strategies.
Music streaming isn't easy. Pandora's IPO flopped, Rdio collapsed,GrooveShark proper vanished, no one really likes Tidal, no one uses Microsoft's Groove Music, and YouTube Red barely launched. Spotify reigns at the top of the streaming pile and this move will only serve to elevate it further.
Regardless of high-profile exits from Spotify by artists such as Taylor Swift, the service chugs along, churning out exciting, innovative features that utilize its superb listening algorithms. From Play It Forward to Discover Weekly, from Release Radar to Daily Mixes, Spotify strove to keep the listening experience a fresh one. Launching the as-yet unnamed feature for unofficial mixes, Spotify is making the right moves toward becoming a music streaming platform through and through. If Spotify went as far as to acquire Dubset, it could own a tool that it passes on to music producers to lower the copyright friction associated with creating unofficial remixes. Once it enables users to upload their own content, either independently or by means of purchasing Soundcloud, Spotify could become the monopoly that music streaming has waited so long for.