​Music Streaming Services – Slacker & Spotify

Music streaming has been a hot topic over the past few years and not just among industry types but to all music lovers worldwide.  Just read the recent headlines. Pandora (a service still not available in Canada) bought Rdio and Apple Music announced (although it was expected) they are shutting down Beats Music at the end of November. There is so much to write about on this topic! We could focus on the battle for ears from all the competitors in this space like Google Play, Apple Music, Deezer, Rhapsody, and YouTube not to mention Canadian based services like CBC Music and Stingray. We could evaluate their respective technology platforms and its impact on a user's experience. We could review the complicated legalities around the many licensing requirements, artist rights' payments and music tariffs or predict how all these businesses will finally stop bleeding money and become profitable ventures―perhaps some or all of these will be future blog posts on this page― however, this review summarizes what Slacker ​and Spotify had to say for themselves at HIVIO 2015. Both Duncan Orrell-Jones, CEO of Slacker, and Spotify's Brian Benedik, North American VP for Advertising and Sponsorships, shared their respective company's vision with Mark Ramsey in separate interviews.

But first, the obligatory background info. Spotify's origins are traced back to Daniel Ek's garage in Stockholm, Sweden before launching in 2008. They are currently in 58 countries with over 75 million users, about one quarter of them are paying subscribers. Slacker launched about a year and a half earlier but due to licensing restrictions, its distribution is currently limited to Canada & USA with about half as many subscribers. Although the vision of the two companies was focused on music distribution, they both now consider themselves more like 'content' distributors.

For the purposes of this summary, I decided to focus on three key topics and explore the differences and similarities of the two companies.


Spotify's objective has always been to connect music fans to artists from its 'search and play' beginnings to today's strategy of programming music for different times of the day, using a combination of human curation and algorithms to match a listener's preferences. Earlier this summer Spotify expanded their offerings to videos and podcasts.

Spotify is most proud of their ability to engage listeners to the point where it's not about the number of 'registered' users but about 'active' users. As a brand partner, the opportunity to reach these consumers is endless whether it is through commercials, branded content or creating something unique through their open API. Engagement is becoming more important than scale.

Since the get-go, Slacker's focus has always been on 'radio' and they believe their uniqueness lies within their programming team. Duncan emphasized that Slacker is human powered radio programmed by people, building emotional connections through voice and personality.  It does what terrestrial radio has always done well; personality being expressed; storytelling; and great programming around music. He used Rob Tannenbaum & Craig Marks' '66 Wussiest Songs Ever' as an example of Slacker's strategy of programming experiences that drive great engagement used on many of their stations.    

Business Model:

Both services offer a freemium tier with the hope of upgrading users to their premium tier(s) to access additional features. 

Slacker's concentration on partnerships is what they believe sets them apart. From a content perspective, they have agreements in place with ABC Radio, ESPN and selected American Public Media properties that help those brands extend their reach and in some cases, consumers being able to personalize their listening experience. From a distribution perspective, Slacker is available through many channels including Verizon phones, Samsung's Milk Music app and Tesla's in-dash entertainment system.  

Duncan, CEO of Slacker, believes the industry challenge is to innovate fast enough around product and pricing. As for licensing fees, he understands that the music industry is trying to end the downward spiral of revenues and maintain a sustainable eco-system. Slacker deals directly with the record labels which allow them to offer premium features such as access to personalized stations off-line that some other companies are unable to do. Spotify's premium tier has similar capabilities.   

Brian, VP at Spotify, predicts content access as opposed to content ownership is where consumers are heading and sees the connected world as the conduit; linking both people and devices simultaneously. Spotify is a social, shareable service where content is easy to share by design.  Over the past year and a half, Spotify has tracked a huge shift from desktop access to mobile devices (moving from about 10% to 65% of consumption) which obviously impacts product development and monetization strategies.    

Like with Slacker, partnerships are crucial in providing the best user experiences and potential growth opportunities. Brian outlined several business relationships such as those with: Uber where passengers can play their favourite playlists while being driven to their destination; Sony who is replacing their own proprietary service w/ Spotify's technology branded as PlayStation Music; Ford & BMW where their app is being integrated into their respective dashboards; Sonos and over 60 other speaker manufacturers that are being built with an embedded Spotify chip; and Starbucks where they are now the in-house music supplier in over 7,000 US locations.       

Slacker & Spotify both welcome Apple into the mix although for different reasons. Duncan feels that Apple taking a page out of Slacker's playbook will draw a lot of attention to his company's strength of talent and human curation. Brian pointed out that whenever a competitor launches a new product, it brings more attention not only to Spotify but the entire industry. 


In early 2014, Spotify made a strategic acquisition when they bought The Echo Nest―a music intelligence and data platform enabling Spotify to layer their first party registration data against a 40 million song database categorized on 'music content' understanding (using tempo, key, energy, danceability, acoustic vs electric, live vs studio) and 'music culture' understanding (using popularity, trends, feeds, genres, social media, playlists). This is then used to develop listener taste profiles against music data (artists, songs, play counts, playlists, stations, skips, favourites) and context data (device, location, motion, time, day). These comprehensive listener profiles harnessed through technology has led Spotify to develop new programming strategies around moods, moments and activities, not to mention monetization channels. As content consumption models change, media opportunities will shift alongside.

Slacker claims that their technology platform evolves the user's digital radio experience. The algorithms come into play by sequencing tracks based on previous interactions and adjusting the songs accordingly that makes them feel more connected to the listener. Other key features of their patented technology include billing integration for seamless tier upgrading and personalized off-line listening.  

Although it's been around for quite a while, the music streaming business (or should I begin referring to it as content streaming) is still in its early days of innovation. Based on the industry's revenues versus expenses, it's only a matter of time until attrition takes hold. Sooner than later smaller companies will have to become profitable in order to survive as piling up huge financial losses is not usually a successful long term business plan. Is aligning desired products with attractive price points in a sustainable model even possible? I'm pretty sure Google, Amazon, and Apple will weather the financial storm and throw money at it for as long as it takes to safeguard their market share. From a consumer's point of view, I hope a few smaller independents will endure as well. 

Other posts you may be interested in:

ABCOM 2015: A summary​
HIVIO: An interview with Kirsten Wolf (Starcom)​
​Our fearless leader: knowing the whole story​