Whether its firing us up for a workout or helping to mend a broken heart, music can play a meaningful role in our lives. Streaming music market leader Spotify understands this. The company uses data analytics to connect us to music it thinks well love, and also to connect the artists who create that music to their fans.

Founded in Sweden in 2006, Spotify began as an alternative to other music download servicesboth legal and illegal.The company shook up the music industry by offering customers music from Spotifys vast library we pay for in one of two ways: with our time or with our money. Subscribers can listen for free but be interrupted by ads, or they can pay a subscription fee for ad-free listening. The fee-based service adds other nice features like the ability to choose tracks, unlimited track skipping, listening offline, and higher-quality audio.

Music lovers have embraced Spotifys model, catapulting the firm to rise to a dominant position in music streaming (2019 stats show a 35 percent market share compared to 19 percent for Apple Music and 15 percent for Amazon Music).But music creatorsthe artistsgenerally have not been so enthusiastic. This is largely because Spotify makes deals with record labels; by the time the money trickles down to artists, the royalties can be pretty small. This famously caused Taylor Swift to pull her music catalog from Spotify in 2014 (although she later reversed herself).

Spotifys active user count tops 286 million, with 130 million of those on its paid Premium service. And with all that downloading, track choosing, and skipping, the company collects a lot of data, which it uses to understand and support customer preferences. A popular service is the companys Discover Weekly feature, which provides a personalized playlist each week. It serves up songs you havent heard before, composed of tunes that Spotifys algorithms believe youll likethink of it as sort of a personalized mixtape (if you are too young to know what a mixtape is, then youll have to google it!).You can also create and name your own playlists, like one for romantic evenings at home and another for that weekend barbecue bash in the backyard. Overall, one of the best value-adding elements of Spotify is the sheer scope of the music availableall genres, virtually any artists, and millions of songs, right on your desktop, tablet, or mobile device.

Spotify is also using its vast data and analytical prowess to both win back skeptical artists whove left and also to attract new artists who are so important to the firms future success. The company launched its Spotify for Artists app that gives artists access to data about their fans, including which playlists create new fans for the artist and how many streams the artists music is getting. The app also gives artists some control over their presence on the service, with the ability to update bios, post playlists, and specify which track is the artists pick. And Spotifys Fans First program helps to identify the artists most passionate fans, allowing the musicians to target them with special offers. In 2019, the company acquired the music-production service SoundBetter, which allows record labels to promote new music to specific Spotify listeners. Spotify expects this two-sided marketplace focused on tools and services supporting artists and their representatives to grow by 50 percent in 2020.

The usefulness of Spotifys vast data stretches well beyond listeners and fans. It also contains a treasure trove of marketing-relevant information that can help advertisers choose which users it most wants to reach. Spotify for Brands is a program that allows marketers of all sorts of goods and services to laser-focus their ads, using insights gleaned from the data that, according to its website, reflect the real people behind the devices. Music is driven by consumers real or desired self-identities, a factor that many companies use in advertising. The data also help to determine optimal ad placement timing. Selling Gatorade? Playing an ad at the end of a workout sounds good.

Today, Spotify differentiates itself from its competitors by the deeper way that it views customer data. But in its early days of using data analytics, the firm focused mostly on standard fare, such as keeping track of online customers after they left its website (known as retargeting). Now Spotify has reimagined customers as not simply clicks or transactions, but rather as unique human beings with changing needs, wants, and preferences that influence their choices in music and in products. As such, Spotifys goal is to build lasting connections with its users and other stakeholders, understanding how people consume the music they select and then applying those insights to better serve its customers and support its advertising clients goals.

What roles will data analytics play in the next chapter of Spotifys growth? While chipping away at competitors market share in the core business of music streaming is fine, the big prize likely will come by pursuing other ventures. Imagine almost anything connected to music and its stakeholders, from smart speakers to selling exclusive lines of makeup that its artists use. Do you like to listen to podcasts? In 2019, Spotify acquired two big producers of podcasts, Anchor and Gimlet Media, signaling a big focus on this other hot audio product in the future. Spotify is in the midst of a remarkable transformation in which artists are moving from foes to fans of its offerings and business model. Whatever direction it takes, its fairly certain that Big Data and smart use of analytics will drive those strategies, resulting in deep understanding of Spotifys stakeholders and providing them with a great experience with the firms offerings.

5-32. Review the four steps in one-to-one marketing. How is Spotify following each of these to support their marketing efforts?

5-33. What are some examples of unstructured data that Spotify is probably using in their analysis?

5-34. Could Spotify use the Internet of Things with their service? Share a couple of innovations they could add that would fit into this category.