The Experience Strategy Podcast: A Spotlight on Spotify

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Welcome to the Experience Strategy Podcast! Today, we are shining a spotlight on Spotify. Spotify has completely transformed how we listen to music forever. Launched in 2008, Spotify has grown to have over 356 million users and includes a free or premium membership to access exclusive features of music listening, offline access, and ad-free listening experiences. Spotify has found a way to connect with consumers on a deep level of emotional response by noticing our likes and dislikes in music and even offering new suggestions for you to discover. Your hosts Aransas and Dave welcome guest Margaret Callcott to talk about her own personal experience using Spotify for herself and her family. Margaret holds a PhD in advertising and consumer behavior from The University of Texas and has a long career in TV and digital content development. Tune into this episode as we speak with Margaret about her user insights and understanding how Spotify creates meaningful experiences with consumers.

[00:00:00] Aransas: [00:00:00] Welcome to the experience strategy podcast. I'm Aransas Savas, and I'm Dave Norton. Today. We are shining a spotlight on Spotify. Spotify transformed music listening forever. When it launched back in 2008, currently their users are able to discover manage and share over 70 million tracks for free or they can upgrade to Spotify Premium to access exclusive features for music listening, including better sound quality on demand, access, offline access, ad-free free listening experiences.

They have such a robust and exciting platform. And I think that's clearly why they are the world's most popular audio streaming subscription service with 356 million users. Including 158 million paid subscribers. And while the music business has. Always been driven by the young today. We're going to welcome someone with a bit more life experience.

Margaret Callcott to [00:01:00] talk music listening with us. Margaret completed her Ph.D. in advertising and consumer behavior at the University of Texas and was part of the original team at Home and Garden Television, which was then of course the springboard to her long career in television and digital content development for Scripps Networks, and Discovery.

And this moment for Discovery is a big one, as they've just announced a few weeks ago that along with AT&T and Warner Media and their vast media assets, including HBO are going to be combined into a new streaming powerhouse that has the potential to radically innovate our media experience for the longterm and compete directly with Netflix, Amazon Prime and Disney directly.

As our telephone vision viewing experience has been transformed through digital innovations, including the internet, the mobile phone, and social media, Margaret has been part of the teams who have really been [00:02:00] digging into customer insights and understanding how to create meaningful experiences into places that consumers are interacting with their media brands.

We are so happy to have you with us today and so excited to hear about your experience with Spotify. But before we do, I've got to ask what was it like these early days at Home and Garden Television?

Margaret: [00:02:30] Well, I would say that it was very much like a startup environment, although I'm not sure 25 years ago we knew that term startup environment.

But that's very much what it was like. I think one of the big concerns at the time was just having enough content to launch. We didn't have all of our ad time sold so we needed public service announcements to fill in the extra time and I was on one of the [00:03:00] teams that were reviewing all of the various PSA's that came in for appropriateness for the air. One of the things we were really concerned about in the early days was making sure that HGTV was very family-friendly. I think a lot of the criticism of cable at the time was that it was not as censored as broadcast and people worried about what was on in the background, particularly with kids in the room.

So one of our foremost goals was to be sure that everyone in the family could enjoy it and no one had anything to worry about. Believe it or not all of the people who loved us, all of the nice things they said about our content early on, one of the bigger comments we got was how much they appreciated the fact that the whole family could watch it. So it was an exciting time. It was a fun time. I did a lot of the types of things that you would not necessarily have expected to be doing, given that I [00:04:00] hired on as a research analyst, the nature of startups, right.

Aransas: [00:04:05] right. I love that. What an exciting time to be a part of such radical lasting change, really. And now to see how the decisions you guys made back then have influenced cable media specifically for generations to come. So talk to us about your foray into Spotify. I mean, you, Dave, and I all kind of grew up in the era of mixed tapes.

Margaret: [00:04:42] Well Spotify, as it turns out, made all of our mixed tapes for us but it was interesting for me to listen to you recite all of those statistics because those were very impressive statistics. I actually came to [00:05:00] Spotify, the way a lot of people who have kids in their households come to these digital products. And that's because my teenager came to me and said, could we get this? And I have to say we had an Amazon Echo in the house. We all had iPhones. We had been offered opportunities previously to upgrade to their music services. And, you know, it just never seemed like it was worth the effort. With respect to asking Alexa to play things for us, I guess a lot of the tunes we were asking for were coming out of the way back machine. Most of those were public domain. Alexa didn't have any problem playing that occasionally you would run across something that we needed to upgrade for, but it was never enough of a problem for us to be motivated. To go that extra step. And the same was true with Apple Music. Most of the time we get asked for a tune and if we couldn't get it, we could pay 99 [00:06:00] cents and get it right then and keep going.

And it didn't seem necessary to subscribe to a service. So when our daughter came to us and asked for the service, it really wasn't because she was interested so much in the on-demand nature of the music. She was already getting her music on demand. She didn't even really care so much about the multi-platform aspects of it because you know, for kids these days, it's really just all about the one platform and that's their phones.

But what she was after was the ability to share playlists with her friends. And they had a Spotify playlist that they wanted to share with her. So it was the social aspect that drew her in. And so, I sat down and signed us all up. And that was the beginning.

Aransas: [00:06:46] So interesting how different the needs are across generations.

And the fact that Spotify is sorting out and it sounds like pretty successfully how to meet divergent customer needs and listen [00:07:00] to different customer voices to inform their products. I mean, I think if you look at the origin story of Spotify, one of the things that really stands out to me is that they were early powerful adaptors of AB testing and made it their mission to understand their customer and to create a product that brought not just a satisfying experience, but an utterly delightful experience. And, and to me, when I look at those stats, it really is just a reflection of the power of user-centered design and of testing, of course, but being relentless and understanding the customer needs and being relentless in adding value to people's lives.

I think that what you said about, it wasn't worth the effort. Well, of course, it wasn't worth the effort. Changes are hard. Change asks a lot of humans [00:08:00] and if we're going to make a change, there better be a really good reason. And it sounds like, with a little nudge from your daughter, you were able to tap into some of the reasons that really made it worth that extra effort and frankly, financial investment, because you are a paid subscriber, right?

Margaret: [00:08:19] Yes, we are paid, subscribers.

Aransas: [00:08:22] And so what drove your choice to upgrade?

Margaret: [00:08:26] Well, so initially Ella wanted to be able to share her playlist and she dove right in and began to do that.

And I continued on and largely ignored it, I think I set up one playlist and, you know, kept going on about my life with some of my old systems in place. I had Alexa that could play tunes for me when I was cooking dinner. I had Sirius XM in the car, which could, you know, kind of categorically sort the type of music I wanted to listen to when I [00:09:00] wanted to listen to music.

So I had kind of a system in place that for the most part was working for me and then we needed to take a road trip. Last summer we were driving up to visit relatives in Pennsylvania. During pandemic times, we were not doing our more ambitious family vacations. We were doing things that were a little more family based.

And so we were driving, taking a 10-hour drive to Pennsylvania and we decided on a way to build a playlist. I would say that occupied our time for six to seven hours. Ella would play a tune that she liked for me and we'd vote on whether or not to add it. I would play a tune for her and we would vote on whether to add it.

And we went back and forth like this as I said for six or seven hours, and it was a great means for [00:10:00] exploring and putting together the equivalent of one of those mixed tapes. We spent hours in our room, you know, lining up the vinyl, pushing the tape recorder to get just the right blend of music. Only this was sort of a multi-generational blend, which was very nice. It was a great experience. So that, I think brought the experience more to the fore for me. Then we came to the end of the year and Ella informed me. that Spotify had published each one of our tunes of the year and I actually had a song of the year and appropriately enough for the pandemic, it was Surrender by Cheap Trick.

I don't know what else to say, except I was so touched. I was like, awww they've taken the time to tell me about my song of the year. And I just felt like, gosh, they really want to have a relationship with [00:11:00] me. So I feel like that took it up yet another notch and then I started getting interested in maybe trying to have Spotify support me in some of my jobs to be done.

You know, that would be the things I want to listen to when I'm cleaning the house. That's a big one, or the things I want to listen to when I'm I'm cooking dinner. Those are the two big things where you kind of like to have a narrative soundtrack to get you through. And so I got into doing that, but of course, I wanted it to play through my Alexa, and that was a little bit harder. I don't think Amazon wants to make it especially easy for you to play Spotify through their service. And so, you know, I, I'm sure a lot of usability work has been done and that there's an easy way to hook those two things up. And sometimes I could get Ella to do it for me. And sometimes we would just default back to getting Alexa, play something for us.

But then I think where the real game changer came was my daughter got her driver's license and we got a new car. And then we [00:12:00] had a new platform. We had a fancy display. We had the easy plug-in USB ports, and all of a sudden it was very easy to use Spotify to play music in your car.

And that's where I really discovered that, gosh, I don't even have to build these playlists anymore. They've already built them for me. They actually had a playlist called cooking jazz. So instead of saying, you know, Alexa play Billy holiday, whatever I was asking for, sometimes I would just say, play some jazz.

No, not that jazz. And they would, you know, Alexa would know what to do. But then all of a sudden I could actually get a mixture of cooking, jazz, or dinner tango and I actually just favorited a playlist called Nordic bakery. So, who knows, but I'm excited to find out what that is. I think that brings up another [00:13:00] kind of important point about this experience.

I was early on impressed with the curation. I was impressed with the sheer number of playlists that could support me depending on my mood or my task at hand. But I did sometimes worry a little bit that I was stuck in the past. The thing about on-demand music is you can pretty much go to your own generational cache of music and just dwell there pleasantly and happily, and not really expose yourself to anything new. The way we used to be exposed when we had to depend on the radio and on Casey Kasem's top 40.

So that was when kind of concern I had about myself but Spotify has thought about that. They do have a lot of options now to discover new music and it's even kind of clever the way they do it because they will recommend things within the genre that they know that you've listened [00:14:00] to.

So that's kind of nice. I think the other thing, most recently I tried was what my sister was pointing out to me. There's something lost when you can't really have the album experience because now you can sort of go through the curation and tends to pull out the top hits by every band.

But we used to listen to albums with kind of this full musical narrative experience. With all the highs and lows built in. And because it was a lot of trouble to pick up the needle and move it past that track. You wouldn't even make yourself listen to things and develop an appreciation for things that maybe were not your favorites or weren't the reason that you bought the album.

And so just to test out that theory, on a recent drive, I said to my daughter okay, we're [00:15:00] gonna listen to a full album. So I tried to think about one that was really influential back in the day and decided let's just start out with Kansas. And we went and we were going to listen to that the whole way through.

And we did, and, you know, the 16-year-old was pretty impressed with that with, with our listening options. Then I said, all right, what's another one and I decided on Sergeant Peppers. Lonely Hearts Club Band. That'd be a good one. That would be a good one to take her through, you know, working up to the Rush albums.

I said we'll work up to those and so that one was a little less satisfying because I don't understand all the rights involved, but you couldn't actually listen to that album. You could listen to someone's playlist of that album, but I wasn't sure if that playlist had been put together.

In the particular order of the album, which is kind of what I wanted her to [00:16:00] experience. So we're going to have to revisit that one after I've had time to research that. But for the most part, everything I have wanted to try to do the platform has been able to support and I find that remarkable.

Miranda: [00:16:17] yeah, it's really interesting because what they've done so successfully here is they've taken these deeply ingrained habits around what's valuable in listening to music and then modernize them in a meaningful way. And so that aspect of collecting music and feeling a sense of ownership over the songs that we used to get from buying the CD or the record or the tape is still apparent there in the ability to create these playlists and the surprise and delight that we would get through listening to the radio are there through the curated stations [00:17:00] and the ability to listen straight through an album and go on a ride or a journey with an artist is adopted into this new platform. And so really what they're allowing it sounds like is it an ability for you to tap back into the emotional values that you had when you were younger and listen to more music and sort of forming those relationships with music listening. I'm struck too, by the fact that when you started talking about your relationship with Spotify, I didn't get that. You were like a big music person now, as you're describing these albums and your approach to sharing this with your daughter, you sound like somebody who's deeply passionate about this.

So when you started with Spotify, how into music were you?

Margaret: [00:17:55] I think it needs to be said I was deeply passionate about it. [00:18:00] in my youth, I mean, all of the money I was earning on my paper route was going toward rock concerts, rock concerts, t-shirts record albums, you know, posters at Spencer gifts.

But I'm not so sure that I was really unusual in my passion given the times, I mean, we were all clustered around the radio on Sunday afternoons waiting for Casey to get to our top songs. I mean music was very central to our lives and I think I've watched it become very central to my own daughters life. They have a little more time to spend on it.

I think that as you get into adulting, move into work, raising family, all of the different things that you do music becomes a little bit more peripheral and I don't [00:19:00] think I realized I missed it until Spotify.

Dave: [00:19:04] That's interesting. I think one of the things that we learned and our analysis just from what Margaret was describing is that she's been in the media industry since she was a child.

I mean, she had a paper route right. Where she had always been in the media industry from that standpoint. Correct me if I'm wrong. That the music industry felt like some of these changes that were occurring were going to take away from the experience, like you weren't going to be able to unwrap that vinyl record and have that. That object in front of you. That everything was going to become very functional. But what you described is not an experience. That's really not all that functional at all. You have immediate access to all of the songs that you could [00:20:00] possibly imagine, or maybe most of the songs that you could possibly imagine. And yet at the same time, you're still having a very meaningful experience. Why is that? Why do you think that's happening?

Margaret: [00:20:16] Well, if you think about music in the context of the conversation we're having, you know what is the job to be done for the music itself, for the listener. And it really is often used as a tool for either.

Aransas: [00:20:37] Let’s pause for a second and talk about what jobs to be done are, what does that mean, Dave? Catch us up there.

Dave: [00:20:45] Awesome. So let's talk a little bit about jobs to be done, and then we'll jump into that notion with Margaret a little bit. So jobs to be done is a term that's used in experienced strategy and design regularly, and it refers [00:21:00] to a way of approaching the needs that the customer has. The person who popularized it the most was Clayton Christiansen, Harvard professor who recently passed away did a lot of work on disruptive innovation and argued fervently that if you didn't understand the job, the customer was trying to get done it was very likely that you were going to miss with your product, with your solution. He wasn't really focused on experienced strategy per se, but the principles still apply. And so when we talk about the job to get done, we're talking about understanding a specific type of need that a customer is willing to hire you to do.

There are lots of needs out there, but only a few needs that they might be willing to actually hire you to do. And oftentimes there are needs that they have that are completely unmet, completely not [00:22:00] understood and technology brings all kinds of new opportunities and challenges for identifying what is actually the job to get done.

So with that kind of a description, Margaret, you're talking about the job to be done. What did you see? What do you see music as being about in terms of what is the job that music is trying to get done for people?

Margaret: [00:22:28] Well, so I think it's about creating or sustaining a mood in any given moment, and that mood changes depending on what it is you're trying to do.

I think interestingly enough, it's always been about that. You know, as an angsty teenager we might need to listen to one thing while laid flat on our backs in the middle of our bedrooms experiencing, [00:23:00] parental punishment. But in other times we might be getting ready to go out for the evening, or more recent years, house cleaning or cooking.

I've mentioned in our family, I've noticed that we always like to get some music going when we leave on a family vacation. It is so much stress to leave on vacation that when you finally get out the door and back the car out of the driveway, whether you are going on a road trip or trying to get yourself to the airport, there is kind of a collective sigh of relief.

And at that point, everyone has their, we're going on vacation tunes that they want to play. For me, it's often Boston, more than a feeling. For my daughter., it's always Adele,. Everybody's got their thing and we have to take turns deciding which tune is going to get to be played when we leave.

But each of these specific [00:24:00] moments, there's, I guess more of an emotional benefit to being able to feel deeper about that moment. And music really supports that journey in a way that very few other things that I can think of do. I think that if I'm the Spotify people, I'm thinking about the fact that what my job is here is to create a meaningful experience around music for people who are using it to worry about their lives.

Does that make sense?

Dave: [00:24:35] Sure it makes complete sense. It's very flexible that way. Music is wonderful because you can be doing something else while you're doing it, or you can be completely concentrated on a piece of content and is a wonderful way of experiencing life.

[00:25:00] Aransas: [00:25:00] An amazing job here too of helping you tap into what's worth paying for something you could get for free. Not exactly the way you wanted, but you can get it for free, and yet you have chosen, to upgrade. And I think that to me is what's really interesting about their product model.

They learned early on that the more you play and the more you will pay, and they have really designed this to be present in your life, whether you're cooking or driving or out for a walk. They have found ways to be with you and help create, as you say, a mode or a mood for each moment.

Dave: [00:25:49] Yeah, it's great. You know, one of the things migrate I learned early when I started using Spotify is that you could download, once you got the premium [00:26:00] package, you could download the songs for use offline. And I think that they were one of the first ones to do that. I don't think Pandora offered that immediately.

I don't think Apple was a completely different experience you could download, but it was a purchase one-by-one type of experience back then. And Spotify really made that easy. It's a functional job, but it actually changes your ability. They did do so much. I loved those features when I first got started with it.

Aransas: [00:26:40] Yeah. That's a very functional benefit right there

[00:26:47] So, Dave, as you think about this experience that's been described here, what are the big takeaways for other brands? I mean, there aren't many people who are competing directly against Spotify, but if I [00:27:00] run my town's local hair salon, what should I be considering? Learning from Spotify is brilliant. I mean, they're an incredible success in this category.

Dave: [00:27:11] Yeah. They really helped to define the category didn't they? There's some new competitors that are coming online. I'm thinking about titles with their focus on high-quality sound and video and so forth.

So there'll always be innovations that are going on. But what I think is most interesting about Spotify and their number one competitor at the time, Pandora was the way that they approached curation. I think they both saw curation as the job to get it to be done and you might remember back when they first started that Pandora had this approach where they would serve you up a [00:28:00] song and you almost wanted to guess what the next song was going to be and they would surprise you with the different songs. Pandora kind of created the situation where you got this sound or the song was kind of stimulus that caused reflection, caused you to think, I wonder what the next song is going to be and then there was this feeling of newness as it taught you things.

You kind of learned the connections between the different songs. Spotify took a totally different approach. They kind of emulated Facebook to a large degree and their approach to curation, the whole idea of a mixed tape. You being able to post something, curate something on your own, create community, all of these great things that they were doing.

So they really focused on the social job to get done. Whereas Pandora focused on the [00:29:00] emotional job to get done. These two very different companies gave you very different experiences with what is essentially the same product. You know, the same music, the social job has when you're doing a social job, you have to have some kind of a common cause people have to be able to like the same type of thing. And Margaret, you did a great job of describing that when you're in a car with your family and you're trying to put together a music list to listen to, that's the common cause then there's some form of personal contribution. There's some kind of reconnection that occurs.

There's facilitation. The company is actually facilitating that for you and making it possible and there's a form of gift giving that occurs along the way. So that is how you do a social job really well. Whereas an emotional job, it's all about stimulus [00:30:00] reflection, newness, stimulus, reflection, newness.

In the beginning, Pandora and Spotify felt very different because they took on very different approaches to curation, and then over time, as they added more features, they begin to seem more alike. Now you can get a lot of the same features on Pandora that you can get on Spotify and it really kind of boils down to which one you prefer but I think that that's why they may not have been saying, Hey, let's do the social job. I think their strategy originally was a strategy around this idea of how do we connect to people? How do we, through music, how do we make it happen? So they've done a [00:31:00] fantastic job. I think they're, they've been really successful.

Aransas: [00:31:03] Absolutely. I think too, what you're really pointing out to us, Dave, is that number one, we have to know what our customers want to accomplish, what matters to them and as you're describing, Spotify has been remarkably good at getting to know their customer's needs and then designing experiences to meet those needs. Often needs that the customers weren't even quite in touch with yet themselves.

And I think if I got responsible for making decisions about the experience strategy for my local hair salon, those same questions, are all true. What do my customers need from this experience? What is the job to be done? And the more I can identify what that is, the more I can ensure that I am showing up for them in the ways that they really need me to, and not wasting my energy and investment on the things that frankly they don't actually [00:32:00] care about, but are just bright, shiny, distracting objects and experience design.

Dave: [00:32:05] Absolutely.

Aransas: [00:32:06] So, Dave. I like to call you the professor. Cause you're smarter than me. Dave, if you were to give this Spotify experience a grade, what would you give it?

Dave: [00:32:21] Well, in the early days, it was magical, honestly. Spotify changed the category and today we assume so much more of our music listening experience because of what they did.

I mean, it's hard not to say that they deserve an A, maybe even an, A plus. They're in a place now where they need to innovate. They've done a great job with podcasts, but there's more that they need to be doing. They need to add additional jobs to be done, but if the [00:33:00] job to be done is curation, I think that they were fantastic at it and we should give them at least an A for the work that they've done.

Aransas: [00:33:11] Oh, that it's a continuous reminder to keep innovating and keep growing. Sadly there is never good enough and their value is going to be based on their growth, which is going to be based on their share of the market and the number of years they have listening, and how they compete with, as you said, a growing list of competitors. They have proven that you can monetize music and do so by still offering free access. I think what they took with freemium was really important too, this subscription model in general and how it exists in the world, but they have continued to enrich both their free and premium [00:34:00] offers. I think it'll be interesting to see how they continue to do so both through adding new and different types of content, new and different ways of access, which we heard referenced in Margaret's story as well and how they add more value and attract a younger audience, because frankly at 16 Margaret's daughter is, is now not their youngest listener. Others well below that, that are going to start making decisions about where they put their loyalty.

Dave: [00:34:42] Yeah, it's a challenging category to really make a difference in because it is always changing and there's always a younger generation that has different expectations. So it'll be exciting to see where things are headed in the future. [00:35:00] We hope that Spotify can keep up.

Aransas: [00:35:03] Yes. Yes. Here's to listening to customers at the end of the day.

That's my big takeaway from this, the more we listen and learn from our customers the better off we will be. And the more deserving of their dollars, we will be. Thank you all for listening and learning alongside us. We look forward to sharing more delightful and frankly not-so delightful experiences with you in the next episode.