Can Spotify branch its business model beyond streaming music?
Speaking on the state of the streaming music industry several months ago, Jimmy Iovine, head of Apple Music, admitted that his company couldn’t profit from just streaming music. In a direct swipe at Spotify, Iovine told Billboard last November,
“The streaming services have a bad situation. There’s no margins and they’re not making any money. Amazon sells Prime. Apple sells telephones and iPads. Spotify, they’re going to have to figure out a way to get that audience to buy something else.”
Now, following the much-hyped release of Apple’s HomePod, how does the Swedish streaming music platform expect to remain on top? Maybe by mimicking what its closest competitors have done.
Say hello to the smart speaker — and a bunch of other hardware — by Spotify.
Spotify hasn’t had a great 2018. Right before the start of the New Year, the service got hit with a $1.6 billion lawsuit. Then, in February, the Wall Street Journal forecasted that Apple Music would surpass the Swedish music platform’s total US subscriber tally this summer.
To gain subscribers ahead of its direct listing on Wall Street, Spotify offered 2 months of its Premium service. Some called that smart, others said it was desperate.
But Spotify may be changing its business strategy entirely. Spotify has recently posted three interesting job advertisements on its website. It is now hiring an Operations Manager in Hardware Product and a Senior Project Manager in Hardware Project. It is also looking for a Project Manager in Hardware Production and Engineering.
The first job advertisement reads,
“You will define and manage Distribution, Supply, Logistics, fulfillment and Customer Service for Hardware Products and work with partners to deliver the optimal Spotify experience to millions of users.”
As stated later in the job description, and unlike its competition, the company doesn’t manufacture any hardware. It has historically relied on other companies to make its service available to users. The company’s Spotify Connect feature lets listeners stream music on a variety of products. This includes the Xbox One, PlayStation 4, Amazon Echo, and BMW’s 7 Series vehicles, among other products.
As of late, however, Apple has grown resistant to integrating Spotify into its products. The HomePod and Apple Watch, for example, only support the company’s streaming music platform, Apple Music.
The move to omit its competitors’ services may have soured consumers on purchasing the HomePod. In his 4-star review of the product, The Guardian’s Samuel Gibbs wrote,
“Missing true Spotify support will be a deal killer for many, as will the inability to play radio stations and the lack of multi-user support.”
According to Fortune, the HomePod has had a troubled launch, as well as dismal reviews. Users have complained about the smart speaker’s lackluster voice assistant technology, Siri. The HomePod also costs $349.
Note that Spotify won’t only produce a single product. The key part of the job description for the Operations Manager reads,
“Spotify is on its way [to] creating its first physical products and set-up an operational organization for manufacturing, supply chain, sales and marketing.”
The job descriptions leave several questions unanswered. Like the HomePod, Amazon Echo, and Google Home, will Spotify implement a voice assistant into its smart speaker? Would the smart speaker integrate streaming from other platforms, or will it follow Apple Music’s “deal-killer” example?
If successful, would Spotify stop offering its Connect feature on other smart speakers? Most importantly, will the streaming music platform launch a functional product? Amazon, Apple, and Google have years of experience developing their own smart speakers. Could Spotify overcome the rocky first generation product launch that its competitors, most notably Apple, have struggled to overcome?
The company has yet to issue a statement in regards to its job openings.
Featured image by Spotify