Spotify recently bought an analytics platform to quickly stay competitive after Apple got some brand good will at the hands of Taylor Swift.
Last week, Spotify made a noteworthy move in the big analytics space and (Taylor?) swiftly bought Beats' (now Apple Music's) analytics provider Seed Scientific. Forging a "new advanced analytics unit," Spotify hopes to better understand how artists, listeners, and brands are interacting with the platform's streaming music services, as well as gaining insights into their competiors' user interactions. This acquisition followed last years' purchase of The Echo Nest, a massive music personalization data provider.
Spotify was already doing several of their own explorations with big data to understand more about what their customers' likes and dislikes are. So why did Spotify buy Seed Scientific when it has its own very capabilities to do the same?
Besides the obvious - to deprive Apple Music and other competitors of the same services - there is a deeper and more far reaching reason. Today, the pace of business is so swift that fortunes can and are made and lost in a few seconds. As a result, companies like Spotify must constantly show investors how they can evolve their gains.
Therefore, big data capabilities are needed and justified to quickly attract more venture capital and financing. In turn, big data fuels operations and defrays enormous operating costs, including the acquisitions being made in order to help fuel that growth. All of this activity is intended to raise the valuation even more swiftly, and as the net worth of an organization moves up or down every moment, financial markets today generally consider value as a multiple of its yearly or quarterly earnings.
Where does Taylor Swift - the "The Queen of the Internet," who I'm a fan of, by the way (Read more...) play into this new axis of power within the dynamic area of streaming music competitiveness?
I think Taylor Swift is unquestionably the most popular and successful celebrity in the music world today, as well as the top streaming music celebrity. The most visible "wild cards" include other performers in her league such as Katy Perry, Justin Bieber, and Justin Timberlake, among others. However, there are a few other wild cards that aren't so visible, but are just as important in their own way: the big data and analytics players, such as Seed Scientific.
Spotify, and perhaps Apple Music, has had business models that haven't really been about the music fan (yet), or even the average music artist who is just struggling to exist. It's all about generating revenue quickly to increase the value of the organization from the mergers and acquisitions perspective.
From that perspective, Taylor Swift's refusal to put her current album, 1989, on Apple Music last week put Apple in a position of having to backtrack and pay royalties to all artists for the first three months the service is live. They weren't originally going to pay any royalties on the streaming music. This decision gives Apple Music and Taylor Swift what they both wanted: attention and good will in world opinion, which I think will, in turn, generate even more profit for both.
"Good will" is a new currency, perhaps the biggest and most important currency of all, and that is important from many perspectives. With the ball back in Spotify's court, what could they do that would steal fire from Apple Music?
My take is that Spotify moved quickly to buy up as much of their available big data analytics fuel as they could with the Seed Scientific acquisition. I don't think it will make much difference in Apple's business because they were always focused more on the brand experience than data.
Spotify, on the other hand, seems to be all about the data, while Apple Music is clearly going after celebrities. Spotify probably isn't that interested in the satisfaction of the average musician, much less music celebrities like Taylor Swift, if recent events are any indication. As a result, they continue to need acquisitions such as Seed Scientific.
Even if Spotify could potentially build these capabilities on its own, it probably wouldn't happen Swiftly enough.
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