🎯 Playlists are Spotify’s moat

More than just the music

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Read time: 2 minutes 56 seconds

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Today, an interesting question came up in a call:

“What are the 3 greatest websites?”

The 3 that instantly came to mind: YouTube, Wikipedia, and HackerNews.

Does Spotify count?
(since the Spotify desktop/mobile app > the Spotify website/webapp)

If it does, it might sneak in.

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Playlists are Spotify’s moat

Chess Move

The what: A TLDR explanation of the strategy

For years, Spotify has done everything they can to incentivise users to create, share and listen to playlists.

Why?

→ Playlists let users craft their own personalised experience.

→ They also provide Spotify with valuable data about user habits and preferences.

→ But perhaps most importantly, playlists embed Spotify as a central, powerful, and indispensable part of the music industry.

Let’s unpack how:

Breakdown

The how: The strategic playbook boiled down to 3x key takeaways

1: Make everyone a DJ

Spotify changed the atomic unit of music from albumsplaylists.

Playlists are inherently personal; they reflect a user’s identity, taste, and mood.

Importantly, this means playlists aren’t just something that users create for themselves - they are made to be shared.

By turning each user into a mixtape curator, Spotify created a system for people to create and share Spotify invite links in a meaningful, personal, and non-spammy way.

Playlists became the fuel for Spotify’s organic growth engine.

2: A new surface for innovation

Over time, Spotify adapted playlists to make them as shareable, personalised, sticky, and monetisable as possible:

  • Collaborative playlists: Create playlists with your friends (and invite them to Spotify in the process).

  • Public playlists: Let anyone listen to your playlists, and display them proudly on your Spotify profile.

  • Smart shuffle: Get personalised song recommendations interspersed throughout your playlist (for Premium users only - driving increased conversions).

  • “Made for you” playlists: Get algorithmically generated playlists, based on your activity, for an auditory journey that is uniquely yours.

  • Sponsored playlists: Give brands access to a listener’s moods, moments, contexts, and desires, by featuring their messaging in ad-breaks for free users.

3: Playlists as a strategic moat

By synthesising vast amounts of metadata on song pairings, preferences, behaviours, listening history, and platform interactions, Spotify emerged with the unique ability to craft perfectly curated “Editorial Playlists”.

These became the guiding tool to minimise listeners’ selection cognitive load, making Spotify the go-to place for music discovery.

Editorial Playlists also marked a broader shift of powers in the music industry: putting Spotify “in control of the demand curve.”

For artists and labels, getting a song into an Editorial Playlist is one of the most powerful growth levers available - featuring in Spotify’s “Viva Latino!” playlist results in US$303,047 to US$424,265 in royalties.

Since Spotify doesn’t own the music on its platform, playlists are the key mechanism through which they exert “curatorial power” and build strategic advantage.

Nearly every screen in the app (Home, Search, Genres, “Picked for You”, even artist profiles) funnels users towards Editorial Playlists.

Rabbit Hole

The where: 3x high-signal resources to learn more

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