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The Experience Battle: Netflix vs. Spotify

Indeed, they are very different business, but both brands compete for our leisure budget and face the same challenge everyday: connect their audiences and help them find content that fits their tastes and preferences.

Figures

With 104 million subscribers in more than 109 countries, and almost a third of the online traffic in the US, Netflix has become the world leader in online entertainment.

Spotify, on the other hand, accumulates 30 million songs and 71 million payment subscriptions. They have just announced its exit to the stock market valued on 1.000 million dollars.

The origins…

Both companies are born of the courage of two men who set out to end the main moment of pain in the sector, but they pushed beyond and ended up reinventing it, sweeping through the competition.

Netflix’s history is born when Reed Hasting rented Apolo 13 in Blockbuster, and after returning it a few days later, had to pay a 40$ penalty fee. He was so ashamed that he didn’t even tell his wife. But, that embarrassment led him to create a model that allowed him to rent movies without leaving his home (and without penalty fees). Legend tells that, before it turned profitable, Reed wanted to sell his business to Blockbuster for 50 million dollars, offer that they declined. We know the end of the story.

Spotify was born on the other side of the Atlantic, in Sweden. Its founder, a child prodigy of business that became millionaire with 23 years, wanted to embark on a new project that truly filled him, and decided to bring together his two passions, music and computing.

The first thing he did was to offer his model based on publicity and subscription rates to the record companies, that naturally, rejected it. Fortunately to the world, decided to launch it by itself in 2008.

The Subscriber Experience

There are many brands that give us WOW experiences in the digital world, but if we had to choose the secret ingredients of all of them, they would be:

Trust: They are honest with the use of the customers information and reinvest them in the improvement of the buying experience. Also, they anticipate our problems, warning us on time.

Social: The digital brands encourage the relationship between their customers and add a social layer to the WOW moments of the journey, making them even more rewarding (and at the same time, viral).

MySelf:  The digital customers don’t want to be passive users of the shopping experience, the want to star in it. They seek hiper-personalization in each interaction.

Purposeful: Digital brands were born of a great dream. But also, are committed to the causes in which their customers believe. They are activist brands.

Quirky: Digital brands offer new and ingenious ways of solving the customer needs. They are pragmatic and make unforeseen uses of technology.

Effortless: They are one click brands, that avoid frictions and offer instant rewarding. They don’t make you wait longer, and if they do, they take care of making it entertained… or the compensate you for it.

These will be the criteria that we will use to qualify both experiences. Let the battle begin!

Experience battle

First Assault: SOCIAL

At the beginning, the access to Spotify was through an invitation. That forced a lot of customers to made tricks to subscribe, each one more ingenious, and browse through the network. And if there is something that we like more than the word “free”, is to feel that we have won. One of its last functions “Follow” allows you to listen to the people you admire or that matters to you, from musical trend creators or industry experts, to celebrities like Obama, and off course, your friends. Also, we can see the most popular songs in each country.

Ideas:  Help them connect even more with their fans, for instance, MIAO A is a Chinese app that allows fans to pay to interact with their favorite celebrities and artists. They sell their time in seconds: in a second it offers a social online interaction, while more seconds (600-7200) allow live chats or meetings face to face. Fans can enter a kind of “stock market” and trade the seconds they have bought with other customers.

Netflix allows to share accounts, but not payment methods, something reasonable, if we take into account that it can condition the future growth of the platform. But as young people share even their Amazon Prime account to save a few bucks…

It also draws attention the recent change in the rating system, from the 5 stars to the thumbs up or down. Behind that, there’s an entire matching system capable of showing you the probability that you will like a series, comparing your historical ratings and viewing behaviors with other users. This system also encourages to vote more, and to visualize more contents.

Another of Netflix’s identity signs is that they launch the seasons suddenly. Indeed, it is a WOW moment that eliminates frustrations and long waits (effortless), but that allows each user to set its own pace (each time more users binge with series, something encouraged by the platform) and this makes it difficult for the debates outside the platform. We must remember that many sign in to Netflix because they start to feel alienated when they talk with they work mates or friends. Also, there is the risk that users do not dose the consumption of the season and end up quickly without any content to see.

Ideas: Second Screen Initiatives where you can find series while you talk with other fans of the series or submerge into action. A police series challenges the spectators to solve a murder in real time through the clues presented in the series. Button of recommendations to friends and contacts.

Second Assault: MYSELF

Lists according to your mood or needs are very popular, but if Spotify stands out is because of its recommendation algorithms: they suggest you new songs, concerts and artists based on your history, but also, the behavior patterns of other users like you and of the trend setters that you follow.

Its Machine Learning is also capable of identifying and discard human patterns, for example, if a Metallica Fan listens to children songs, it implies that he has kids, not that he is weird. In 2015, it added 3 more functions: Spotify Running, to listen music adapted to your running pace; Spotify Party, with which you can make your own party mixes; and Video Shows, with entertainment news. Its microsite Yearinmusic offers personalized infographics with the year review.

Ideas: To be able to value the songs according to your context, and in that way, the system will be capable to recommend you the best playlist, according to the moment of the day.

Due to the more limited catalogue in Spanish, the Netflix’s recommendations are somewhat less curated. Many customers feel that it recommends the same content to all, even if its recommendation algorithm divides the content in more than 77 microgenres.

We made the test: Catalog of content and recommendations for two different users. The differences are considerable, either in the order of the categories as well as in the titles suggested. And even that, each user considers more attractive the “other’s” screen.

What they actually adapt very well, is the way in which they present the contents, personalizing the image for each user. For instance, if you like Uma Thurman, they will show you Pulp Fiction with her. If you are fan of Travolta, you will see a very different cover page. The fact of having their own productions, that the user can’t find in any other place, and their exceptional documentaries, are other points in favor. It is almost impossible to make screenshots or tape content, which increase the exclusivity by itself.

Third Assault: Quirky

None of the platforms shine due to the amplitude of its catalogue. Netflix has a limited catalogue in the Hispanic world, and Spotify is just as Apple Music. But they have high quality contents.

During almost 4 years, Spotify, had an app store that closed in 2014. The apps were integrated in the desktop player and allowed you to see the lyrics of the song, browse for concerts o make new playlists. But they realized that they could do all by themselves and so they integrated it to their own app.

Something that Netflix does very well is to anticipate the premiers and communicate the news: they send a notice, mostly on Monday or Tuesday, so that the user is anxiously waiting for the weekend to arrive to enjoy the premiere… a WOW expanded on time!

Ideas: Manage the frequency of the notices. Due to their willingness to create their own contents, there’s a lot of time between notices, their objective should be to deliver good news each Monday, so that they will wait exited the arrival of each weekend.

Fourth Assault:  Purposeful

Both brands were born with their own clear purpose: transform the industry, and their customers are part of it.

Netflix is a company that encourages quality content in their original productions (66 at the moment), but also influences the society with their excellent documentaries, that talk about social change or industrial subjects, that few times end up jumping to the media. They dare to everything.

Ideas: Crowdfounding functions to finance documentaries or scripts, alliances with airlines and hotels to be able to travel to those places that appear in the series, etc.

As we said at the beginning, Spotify managed to solve a big moment of pain of the musical industry. To have to pay 30$ for an album where you only liked 3 songs and to be attached to a music player. With the overcome of those challenges, the brand sets new missions, like promoting small artists o place itself as a music TripAdvisor. There are several occasions where Spotify has united important renowned institutions like Cambridge University to choose 20 scientifically perfect songs to wake up, work or study. Also, they tell you curiosities of your artists or songs. Overall, you learn musical culture, something Netflix can explore more. At last, the SAM functionality of Spotify forecasts surprising brand extensions in other sectors such as health and education.

Fifth Assault: Trust

Netflix went through a strong controversy for its covert advertising in the series (product placement), and there are several occasions in which they received complaints about its daring promotional campaigns, but they knew how to respond and cancelled the agreements with the performers involved in sexual scandals.

Spotify has suffered the boicot of several artists who complain about their commission policy, even though the formula they use is public and seems pretty reasonable.

According to Galssdoor, 71% of Netflix employees will recommend a friend to work there, while 81% does it in Spotify, a good indicator of Employee Experience.

Customer Service is excellent in both cases. The downloading experience in Spotify is extremely good. But Netflix stars the best stories online, to the purest Amazon style.

Sixth Assault: Effortless

Beyond the usability of the app, that plenty bloggers have already dissected, and their policy to attract users towards the Premium account through free service or period trials, we will focus on those tools that can suppose a plus in the customer experience. Spotify not only thinks about the user, but also on the artist and events promoters. They offer tools like Colourizer, that allows them to apply the characteristic Spotify colors to any cover or poster, with just a pair of clicks. As for the user, with Spotify you can know when your favorite artist will be giving a concert, or even buy a vinyl disc of the song you are listening, with just a pair of clicks.

 

Ideas: Improve the song search functionality in your library and organization of playlists.

Spotify doesn’t manufacture software or loT (even though they have already stated that they will do soon), but they do associate with the ones who do. For example, there are some Samsung speakers adapted with the Spotify Connect technology, with which you can reproduce music directly from your phone. They have also associated with Starbucks to be able to reproduce music in exchange for loyalty points of the brand and all employees have premium accounts to make recommendations to the chain’s customers. Also, they’ve partnered with Waze to be able to listen your playlists while you use the popular GPS.

Netflix’s usability is also very successful, as the average user only spends two minutes to choose what he wants to see, but the need for a good internet connection, and the space that its series require, if you want to see them without connection, damages the experience. Netflix has launched other initiative like the DIY Switch button, that orders your favorite pizza, unplugs your gadgets and turns off the lights so that you can enjoy your Netflix’s session, but it’s not too willing to make joint campaigns with other brands. There was a moment when the offered guests from certain hotel chains the option of using their Netflix account in the suite’s TV or event get a trial package.

FINAL SCORE

As we have seen, Spotify is particularly good in helping the user to find the content he seeks and to connect him to other users and favorite artists. Adapt to the context of the client and design Customer Journeys to different kinds of music. Netflix is particularly good in creating exclusive content and communicating them with impact, also to enhance and stretch artificially their WOW moments and encourage the recommendation among users.

 

AND THE WINNER IS….

 

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Maurien Martínez
About

Maurien Martínez

Directora IZO Insights, speaker, creative ninja y trendhunter.

Comments

  1. borja andres janariz sanchezWednesday April 11th, 2018

    Lo primero buen articulo, ambos modelos de negocio han evolucionado de forma muy distinta, Ambos han acabado dando salida a un sistema que incluso siendo de pago, tiene hueco para los que apuesten por la experiencia del usuario como modelo, compitiendo con monstruos en España como Movistar (imagenio), Vodafone, etc: ADAPTABILIDAD es el arma ahora, pero si no invierten en contenido corren el riesgo de perder estas posiciones que tienen. El contenido es el rey y el servicio a demanda, es la gasolina para mantenerse. Ahora hay que ver si el modelo de ambos es posible mantenerse solo con suscripciones o incrementando el ratio de publicidad.
    Desde mi punto de vista de usuario el interfaz y capacidad de Spotify te permite ir mas allá y tiene un link emocional muy potente. La comodidad del usuario digital y los procesos de decisión de one click, cada dia mas complejos de predecir y la nueva generación, nacida en estos años 2000 son los que aguantan o no estos negocios
    respecto a Spotify soy usuario desde hace ya creo que 6 años, y la experiencia es mas personal, Lo que nextflix te conoce y personaliza es la parte de gestión que Spotify como negocio tiene que aprender y explotar internamente, ya que sus algoritmos (ya vistos antes en amazon) te dan esa posibilidad de sentir una personalización total. De cualquier forma viviremos unos próximos 2 años de carreras para poder posicionarse en el ocio particular por parte de varias plataformas.

  2. David Pow Chon LongWednesday March 7th, 2018

    Sin lugar a dudas los dos mejores exponentes en materia de entretenimiento que han sabido aprovechar la coyuntura de oportunidad que presentan los contenidos como modelo de negocio y explotarlo de la mejor manera, siguiendo muy de cerca la experiencia del cliente como factor diferenciador que a la larga genera una ventaja competitiva sostenible en el tiempo.
    Sería interesante extender esta comparación a otras industrias donde sus participantes digitales destaquen, ejemplo Amazon, Alibaba, Zapos, Despegar, etc.

    1. Administrador PrincipalSunday March 11th, 2018

      Desde luego que sí. Despegar.com vs. Atrápalo, Amazon vs. Zappos, Zara App vs. Privalia…serían combates de lo más interesantes. ¡Nos lo agendamos!

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