Why Spotify is Betting on Big Data for More Listeners

When Metallica drummer Lars Ulrich gave Spotify his blessing and his catalog in 2012, he said that his initial rejection of the digital music revolution was “about control” and giving artists the option to decide who was able to access their content online. Since then, streaming music has become the most popular way for people to listen to music; listeners racked up about 4.5 billion hours on Spotify alone.

And Spotify isn’t even the most popular service: Pandora wins the streaming race with 31 percent of listener share, following by iHeartRadio and iTunes Radio. Spotify comes in at a distant fourth.

But a recent acquisition could help Spotify beat its competition. Music intelligence company The Echo Nest collects data for a variety of companies, and is responsible for viral map of regional music preferences. The Echo Nest is partnering with the streaming service to “strengthen Spotify’s ability to help brands and partners building amazing experiences for their audiences.” The catch, however, is that other streaming services and content distributors use The Echo Nest. Spotify’s move proves that content distribution, informed by research and extensive data, is what drives the online market regardless of product.

And while the music data company plans to allow those companies to access its data for now, surely that will change in the future. What will content distributors like Rhapsody, MTV, Twitter and streaming competitor iHeartRadio do when their largest source of data is gone?

Create and nurture niche audiences

Rdio is planning to cut ties with The Echo Nest, using another service called Rovi for their data. But for smaller services like Rhapsody and Slacker, researching current listeners and providing the content they consume most could be a way to keep their audiences.

By creating a large community around a particular genre of music, or a number of smaller communities around artists or types of artists, streaming services could tailor their own offerings to serve their audiences better and more accurately.

And brands would follow. One of the more annoying features of Spotify for listeners who use its free service is its often annoying ads. Better data could help brands partner with the best streaming services and reach their target audiences.

Community content creation

Niche audiences are becoming the most reliable way for content creators to become and remain successful; but finding and cultivating small audiences is a challenge. From video to ebooks, self-publishing and community building are big business for both artists and large companies like Amazon and Soundcloud.

Beats Music is ahead of this trend by buying Topspin, a company that allows bands to sell directly to fans; it’s a partnership that allows individual artists to retain control of the content they create while reaching audiences much larger than they perhaps could on their own.

Spotify’s purchase of The Echo Nest is a smart buy, but there’s no guarantee that it’ll help the streaming service rise above its competition. Still, the power of data to drive how companies distribute content is only growing; and brands looking for audiences need to learn how to harness it.

Image credits: press.spotify.com, MusicMachinery.com

Source: B2C_Business

Why Spotify is Betting on Big Data for More Listeners