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Valuable Lessons From Spotify’s Business Model



Spotify has been on my business model watch list for some years. They constantly leverage partnerships to build next steps for developing their business model and achieving growth. In this article, I wanted to take a closer look at some of the partnerships that Spotify has created. How does the business utilize these partnerships? To what extent are these partnerships successful? Do they contribute to a cohesive user/customer experience, or is Spotify turning its product into an attribute soup?

Many people, including myself, know and love Spotify, the online music streaming service from Sweden. Initially Spotify was only available in Scandinavia. They expanded to more countries whenever they could obtain licenses for streaming music. These licenses are terribly laborious to obtain, as each country has its own systems and process for agreeing on the terms for broadcasting.

In the early days of the company, Spotify’s priority appeared to be to get enough coverage geographically, working hard to obtain license deals. But now that they have achieved coverage, they’re dealing with other growing pains. Spotify has a sizable body of listeners, about 50 million. Of those 50 million, 12,5 million are paid subscribers. These are also the company’s main source of revenue. But with increasing competition from services like Apple’s upcoming Apple Music platform, Rhapsody, Rdio, and even Youtube, Spotify is on a mission to onboard more users, and to increase the rate at which they can convince free users to convert to a paid premium subscription to the service.

Within this business landscape, Spotify is clearly opting for the partnership model to compete. Just a sample from the list shows partnership collaborations ranging from Coca-Cola, to Bang & Olufsen, to Uber. However, these partnerships are strikingly diverse. You wonder what the overall strategic rationale would be.

To better understand Spotify’s partnership-driven strategy, I’ve selected a couple of interesting partnerships for closer examination. Firstly we’ll look at Spotify’s deal with Facebook, because Spotify utilized this partnership to enter the US market (where it was completely unknown, before entry). Secondly, we’ll have a look at Spotify’s deal with Bandpage, a social media integration site for artists to engage more with their fans. Lastly, I’ll speculate about the recently announced partnership with Starbucks, a very interesting move, blending value from 2 seemingly disparate industries, each operating with their own clock speed.

I will use The Partnership Canvas in combination with the Business Model Canvas to examine these partnerships. For each case I’ll reflect on 2 critical questions to assess the robustness of the partnership rationale:

  1. Does the partnership contribute to Spotify’s current strategic challenge to on-board more users, and increase the rate of conversion to premium subscriptions?
  2. Are these partnerships an equally compelling proposition to Spotify’s partners?

Spotify and Facebook
As I mentioned in the beginning of this article, Spotify was initially active in the European markets. However, they didn’t have any directly addressable market in the US. Nobody knew them when they wanted to enter the US in 2011. Instead of going for a widespread advertising campaign, Spotify opted for a leaner approach by using Facebook’s channels to land in the US.

-Partnership design-
The design of this partnership is as follows. Spotify has its eyes on Facebook’s main asset: and its users. Spotify’s offer is to leverage this channel with shareable streaming music content. This way, Spotify offers its unique resource of music licenses, which were painstakingly won on a country-by-country expansion basis, as a proposition to leverage Facebook’s social networking proposition to its customers.

To ensure mutual accessibility to these value elements, Spotify and Facebook have jointly created a music streaming API to stream, and share Spotify-powered tunes within Facebook.

This value exchange creates a new channel for Spotify, where its app is displayed prominently on the Facebook user’s dashboard. For Facebook this exchange creates an addition to its value proposition by offering legally shareable music on the social network, something that would have taken them ages to attain by themselves. This sharability additionally boosts Spotify’s presence by creating viral network effects to expand its reach to new users.

The complete setup of the partnership, and the contribution to each partner’s business model is shown below:

Fig 1. The Spotify-Facebook partnership visualized using the Partnership Canvas v2.x
Fig 1. The Spotify-Facebook partnership visualized using the Partnership Canvas v2.x (Click to enlarge)

-Partnership Hypotheses-
The hypothesis for Spotify is that the Facebook channel, in combination with the network sharing effects, will provide it with exposure in the US, and lead to new sign-ups. The focus is mostly on acquiring new users. The partnership design doesn’t address the deepening of engagement with these users to increase the likelihood that they will convert to a premium subscription.

For Facebook the hypothesis is more complex. The music streaming service value proposition firstly has to increase user engagement with the platform. In turn, this engagement must then lead to new user behavior data, which would increase granularity for targeting advertisement campaigns for Facebook’s main source of income: advertisers. 

As for the objective on obtaining more users, this partnership was a very successful partnership for Spotify, because they successfully entered a new market in the quickest way possible. Their current presence in the US market validates their partnership hypothesis. The fact the partnership is still active to date, is an indication that it is also creating value for Facebook.

Spotify and Bandpage
The context for this partnership is compelling. Spotify has been under fire from several artists like Radiohead’s Thom Yorke, and Taylor Swift about the rewards they obtain from providing their work on the Spotify platform. As a response, Spotify was compelled to search for new opportunities to add more value to their relation with music “suppliers”. They saw an opportunity to make this happen in a partnership with Bandpage. Bandpage is an online service that integrates an artist’s social media presence. Artists are able to integrally update news on their tours, and availability of merchandise from their sites, to a wide range of media channels, like Facebook, Twitter, Xbox, and in turn increase engagement with their fans. Could this partnership solve Spotify’s issues with artists, and at the same time increase user engagement with its platform?

-Partnership Design-
What Spotify desires from Bandpage is the convenient link it provides to the artist’s own media campaigns. Spotify would be able obtain all their artists’ campaign content through a single aggregator, instead of having to source it from each artist individually. To leverage this asset, Spotify offers the artist’s Spotify profile page, and their (playable) discography (again employing the licenses it has to artists’ music content) as a means of targeting promotional campaigns.

To ensure mutual access to the value that these partners bring to the table, Spotify has created the ability to integrate Bandpage’s content stream into the artist’s Spotify profile. Artists can opt-in to this feature by linking their Bandpage and Spotify accounts.

The value this creates for Spotify is the ability to offer instant updates to a highly targeted audience of artist fans. This is a value proposition to both fans using Spotify, as well as to artists. Interestingly this expands the role of the artists in Spotify’s business model. They move from being a supplier at first, to also being a customer to the Spotify platform through the partnership. For Bandpage, this partnership fits into their overall partnership strategy to link up with as many relevant social media channels as possible. The added benefit in partnering with Spotify is the highly targeted channel to fans.

The complete setup of the partnership, and the contribution to each partner’s business model is shown below:

Fig 2 The Spotify-Bandpage partnership visualized using the Partnership Canvas v2.x
Fig 2 The Spotify-Bandpage partnership visualized using the Partnership Canvas v2.x (Click to enlarge)

– Partnership Hypotheses-
For Spotify the partnership creates a new value proposition for a new customer segment, namely artists. To find out how this proposition would play out, Spotify would need to test the hypothesis that this campaign positioning will convert to a significant increase in traffic to the artist’s site, thereby stifling their criticism on the lack of value Spotify creates for them.

For Bandpage this partnership will create a new channel via the Spotify platform. The main hypothesis I would test, is whether this very targeted channel to fans leads to a higher conversion rate in sales of the artists’ merchandise. The reason is that Bandpage’s revenue stream depends on sales taking place on the merchandise sold through the leads it creates with fans.

Whether the partnership was able to validate these hypotheses is still not clear. From my own experience in using Spotify (a lot) and listening to a broad range of artists, I haven’t seen any artists that have used the Bandpage integration yet. If artists aren’t making use of the possibility to link their Spotify and Bandpage presence, it will also not create any additional engagement with fans.

It’s thus likely that the partnership isn’t creating the value hoped for. On the other hand, the partnership doesn’t conflict with either of the partners’ business models, and it doesn’t cost either business anything. So it is could be that this partnership will be continued and improved upon.

Spotify and Starbucks
Yes, you read it right! Spotify and Starbucks recently announced a partnership. A music platform, and a coffee house are joining hands. This is a seemingly unlikely combination, but Starbucks does have a track record in providing music as part of its value proposition with its range of CD collections, and until recently its partnership with Apple’s iTunes. Although the partnership with Spotify is yet to be implemented, and both companies are secretive as to what their proposition will actually look like when they launch, we can speculate how it might play out for both partners by filling in some of the blanks from their press release.

-Partnership Design-
Spotify has some Starbucks assets on its list that it desires to have access to. Firstly, Starbucks has over 7.000 physical coffee shops, and 150.000 staffers on the ground. This is something Spotify doesn’t have. Secondly, Starbucks has a very successful loyalty program, which hosts about 10 million active members.

To leverage these assets, Spotify can offer its streaming music service, to be used in the context of Starbucks’ physical stores. This is very interesting to Starbucks as they have no presence yet in the growing music streaming market. Secondly, Spotify has a group of premium subscribers of comparable size and geography to Starbucks’. Together, this could create an interesting community.

To provide mutual access to these value elements, the partnership would create 2 types of transfer activities. Firstly, the partnership will integrate a Starbucks staff playlist feature into the Spotify app, so Starbucks staff can stream music in-store. Customers will also be able to vote/comment on these tracks to influence the music that is played. Secondly, Spotify and Starbucks will couple their respective premium accounts, and loyalty program. This creates the opportunity for combining forces to deepen customer relationships.

For Spotify the partnership will create a new channel, where their platform is used in-store to provide for music. Also staff will be actively promoting their brand. Secondly, Spotify could offer Starbucks rewards for every increment in duration of a user’s premium membership with Spotify (but this is speculation).

For Starbucks the partnership will mean that they’ll gain a prominent position on Spotify’s categories of playlists. This could give a significant boost to Starbucks’ online presence, and opportunities for people to engage more with the Starbucks’ brand. Secondly, the coupling of membership/subscriber accounts would enable Starbucks to hand out tokens for Spotify membership discounts in combination with their loyalty program points (again speculation).

The complete setup of the partnership, and the contribution to each partner’s business model is shown below:

Fig 3. The Spotify-Starbucks partnership visualized using the Partnership Canvas v2.x
Fig 3. The Spotify-Starbucks partnership visualized using the Partnership Canvas v2.x (Click to enlarge)

-Partnership Hypotheses-
Of all the three cases, this partnership is the only one that has the potential for meeting both facets of Spotify’s strategic challenge. By having an in-store presence Spotify could expect more people to sign up for their service. On top of that, the link with the Starbucks loyalty program could incentivize these sign-ups to a premium membership, resulting in an improved rate of conversion!

For Starbucks, the main hypothesis is that providing streaming music will enhance engagement with their existing loyalty program members, as well as increase the number of loyalty program members, by onboarding people from the Spotify platform.

We’ll have to see if this partnership design will actually be implemented as described. But in any case, the combination of values between these two companies has great innovation potential to boost the customer experience.

Spotify’s full partnership portfolio
Now that the partnerships have been presented separately, the question remains whether Spotify’s business model is still cohesive.

The portfolio overview of these selected partnerships is presented below. Overall they don’t overlap in terms of their market space. Also the partners don’t interfere with eachother in terms of brand identities. Spotify has figured out a way of positioning their partnerships discretely enough, so that they don’t interfere with user segments that don’t care for making use of what the partnerships have to offer. This is a good indication that the partnerships can co-exist within Spotify’s business model.

Fig 4. Spotify’s partnerships with Facebook, Bandpage, and Starbucks.
Fig 4. Spotify’s partnerships with Facebook, Bandpage, and Starbucks.

What’s also striking is that Spotify is very consistent in their partnership design. In each case, they seek for an opportunity to leverage their key resources: the music licenses. Even though Spotify might be dwarfed by the size of some of their partners, the asset of having these licenses brings enough to the table to be an equal partner in negotiations with the likes of Facebook and Starbucks.

Final thoughts
The Spotify partnership cases have been instrumental to show how the company experiments with partnerships to evolve its business model to compete. The $64.000 question remains what business model will prevail in the space of music streaming. Yes, Spotify and its streaming competitors might draw in a lot of free users, successfully pulling them from the paid downloads market. But the streaming industry is still struggling to find the business model to pull of the job of converting people to paid subscriptions. The key will be to keep experimenting with the value proposition and the customer experience.

Spotify stands out in this respect. They’re approach to experiment through partnerships to find the right business model pattern stands out. Not only because they amplify their existing business model, but even more so because they are willing to utilise partnerships to reshape the building blocks in their business model.  Spotify takes partnering to a whole new level.

Aside from the case specific insights of this article, the Spotify partnerships also reveal some generalities about partnerships and business model design. I would like to close off this post with these insights:

  1. Money is not the critical factor in designing partnerships. A partnership is built on the combinations of value from both businesses, which don’t depend on paying each other for a service. As soon as money enters the discussion, you might be moving towards setting up a transaction, or to an investment relation. Those relations are very distinct from the partnership relation.
  2. The realm of partnership enables you and your partner to create value. The realm of your respective business models will determine whether you’re able to deliver and capture that value.
  3. A partnership only really works when the hypotheses for value creation (in the partnership) and capture (in the business model) are validated for both partners.
  4. Every partnership is only a hypothesis upon conception. Partnership hypotheses need to be tested, and most likely iterated. Therefore it makes a lot of sense to apply the lean startup build-measure-learn cycles to developing partnerships. A tool like the partnership canvas can help to communicate and consciously design experiments for testing together with your partner.
  5. Use the partnership canvas for partnership portfolio design. Avoid loosing overview what partnerships contribute to your business model by being explicit about what each partnership contributes, how you test and monitor whether that works. Also prevent partners from getting into each other’s space by partnering with you, and make sure that you don’t mash up conflicting brand identities in your partnership portfolio.

If you’re interested to learn more about the partnership canvas, and interact with me to further develop it as an add-on to the business model canvas, then sign-up to the blog below, or get notified for the upcoming webinar with the lowdown on the tool.

[I owe a truck load of gratitude to some people who provided me with the feedback on this post. Firstly there’s my wife, Anne Bruinsma, an leader on open innovation in agriculture. Then there’s Mike Lachapelle who is a very experienced business model consulting practitioner. And Syamant Sandhir, who is an expert on designing customer experience for the web.]


Women on Top in Tech – Dr. Sanna Gaspard, Founder and CEO of Rubitection



(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Dr. Sanna Gaspard is the Founder and CEO of Rubitection, a medical device start-up developing a diagnostic tool for early stage pressure detection, assessment, and management. She is an Entrepreneur, inventor, and biomedical engineer with a passion for innovation, entrepreneurship, healthcare and medical devices. She has received recognition and awards including being selected as a finalist for the Cartier Women’s Initiative Awards(’13), a semi-finalist for the Big C competition (’14), a finalist for the Mass Challenge Business accelerator in Boston, and taking 1st place at the 3 Rivers Investment Venture Fair’s Technology showcase (‘11). Her vision is to make the Rubitect Assessment System the global standard solution for early bedsore detection and management.

What makes you do what you do? 
I am driven to have impact and improve healthcare as I have a strong drive to problem solve, comes up with new ideas, and see them come to life.

How did you rise in the industry you are in? 
I first focused on getting the educational background and then I pursued the goals I have for myself. I got my PhD in Biomedical Engineering with a specialization in medical device development. Having the educational background is important as a woman and minority to assist people in taking your seriously.  After completing my PhD, I focused on bringing my invention for a medical device for early bedsore detection and prevention called the Rubitect Assessment System to market to help save lives and improve care.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
I started my startup, Rubitection , because I felt it was the best way to bring the technology to market. I knew that if I did not try to commercialize the technology, it would not make it to the doctors and nurses. I also have confidence that I could manage developing the technology since I had taken classes on entrepreneurship and had my PhD in biomedical engineering with a specialization in medical devices.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? How did you make a match if you did, and how did you end up being mentored by him/her?
No, I don’t have a specific mentor in my field. I am looking for one at the moment. However, I do look up to Steve Jobs and Oprah as examples of how one can start with nothing and work their way up and build a successful, global, and reputable business and brand.

Now as a leader how do you spot, develop, keep, grow and support your talent?  
I first try to find people who have fundamental technical or work experience to be competent to complete the work. I then evaluate the person for intangible skills like independent thinking, reliability, leadership, resilience, organizational skills, strong work ethic, open mindedness/flexibility, and good communication skills.

Do you consciously or unconsciously support diversity and why? 
I consciously make an effort as a minority woman in tech, I intimately understand the need to promote diversity within my business and outside my business. I first hire the best people for the job and also make a point to hire women and minorities qualified for the position.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?  
It takes resilience, vision, being a team player, an ability to inspire others and delegate work, knowing your weakness, and knowing when to put your business or yourself first.

Advice for others?
My advice to others is to take calculated risks, pursue every opportunity, surround yourself with supporters, build your team with smart dedicated people, and stay focused on your vision. I am striving to implement this advice myself as I work towards commercializing my technology for early bedsore detection, grow my team, and recruit clinical partners to address an $11 billion US healthcare problem which affects millions around the world.

If anyone is interested in learning more about our work or company, please contact us at [email protected].

To learn more about Dr. Sanna Gaspard, CEO of Rubitection visit:

If you’d like to get in touch with Dr. Sanna Gaspard, please feel free to reach out to her on LinkedIn:

To learn more about Rubitection, please click here.

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Women on Top in Tech – Suzanne Wisse-Huiskes, Founder of MatchBox Consultancy and an Advocate at the Global Tech Advocates Network



(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Suzanne Wisse-Huiskes is a Strategic Consultant and Founder at MatchBox Consultancy with offices in the United Kingdom and Nigeria. MatchBox provides expert advise in Impact Investing, Alternative Finance, Venture Capital, Fundraising, Women Leadership, Business Development, and Economic Empowerment. She is also an Advocate at the Global Tech Advocates Network. Dedicated to challenging talented entrepreneurs, Suzanne is an official mentor at startup/accelerator programs in Africa, Europe, and Asia. She was awarded top 400 most successful women in the Netherlands for two years in a row.

What makes you do what you do?
My drive is to enable entrepreneurs to grow their businesses by improving their access to funding. This can elevate an entire community. I believe that Alternative Finance can potentially be a powerful catalyst for shifting the way our financial markets work.

I love the ingredients of the alternative finance market: the innovative nature of the industry; the global playing field; the turbo speed of change. The market is booming and shows little sign of slowing down.

I founded MatchBox to support highly motivated entrepreneurs and investors in their mission to create profitable businesses with impact. MatchBox has become a trusted partner to these clients: they value our strategic and operational expertise, as well as our strong global network used to consult and connect. The requests vary from developing large investing programs to ensure access to capital for SME’s, to developing funding strategies for entrepreneurs. What works in one country may not work in others. We understand the local players and the local markets. This work is fully aligned with what is important to me.

How did you rise in the industry you are in?
I’ve been in the crowdfunding industry since 2008. Back then, Facebook only had a 100 million active users as opposed to the 2.000 million users today. Kickstarter, one of the world’s largest funding platforms, was yet to launch. Joining the industry that early in the game, allowed me to rise with it. I was fortunate to be part of initiatives that pushed the Alternative Finance ecosystem, first in Amsterdam, then on a broader European level.

Then later on other emerging markets began to interest me. I moved to Nigeria, to work in Africa’s fastest growing economy and home to exciting trends in capital and fintech. I familiarized myself with the investing ecosystems in African countries. Today, I work in alternative finance ecosystems in Asia, Africa and Europe. Being able to learn, share and compare best practices from different economies to me is key in the rise of the industry. Currently, the crowdfunding market in Asia alone is worth over 200 billion Euros. That’s huge!

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
I’ve always followed my heart in my professional life. I focus on work that I am passionate about and am not afraid to take the path less travelled. So leadership, demographics never held me back. With my experience and skills I am well positioned to successfully get the job done. For me it doesn’t feel like it’s a stretch.

Even more so, my clients see it as a big advantage to have women on the job. I recently worked on an impact investing program in West Africa focussing on women-led SME’s and experienced the benefits of a diverse team. Women entrepreneurs see the world through a different lens and, in turn, do things differently.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? How did you make a match if you did, and how did you end up being mentored by him/her?
The industry was completely new when I started, with no seniors to learn from. As a strong believer in mentorship, I do reach out to people in other industries for feedback and to bounce ideas.

I also learn a lot from working with various entrepreneurs. Collaborating with Sir Richard Branson in the beginning of my career was encouraging. We did a successful Crowdfunding Campaign for the elephants in Botswana. But I’m equally impressed by entrepreneurs that make a huge impact on their community no matter the circumstances. I’ve seen exceptional people grow businesses in the poorest regions of Nigeria. One can only admire their leadership.

Now as a leader how do you spot, develop, keep, grow and support your talent?
For me, mentoring young entrepreneurs is a great way to develop and grow talent. My focus is usually on two mentees at a time to ensure there is enough time to discuss ideas and challenges. I worked at fintech startups for almost 10 years before founding MatchBox. So there are plenty of stories to share and learn from, both on failures as well as on successes.

Do you consciously or unconsciously support diversity and why?
I’m very vocal on the need for diversity. I’ve always found myself in the male dominated groups. First at University, then in my first corporate position, and later as a Board Member. At some of my MBA Finance classes, I was the only woman in a room of 50 men. It never bothered or intimidated me. It just made me work a little harder.

Nonetheless, diversity is much needed. I strongly believe the industry is missing out on many brilliant women. That is why I dedicate a great deal of time mentoring female entrepreneurs. We discuss the tools their businesses require to grow and attract the right type of capital. Investors still have a different approach towards female founders. This year, we are launching an initiative called ‘the Republic of Female Founders’, to provide practical tools and guidelines that are specific for this group.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
My general rule of thumb: If you want to go fast, go alone. If you want to go far, go together. For me, it’s all about collaborative leadership. My industry is becoming increasingly complex, so sharing best practices will bring us far. That’s why I became an Advocate of the Tech Shanghai Advocates, part of the Global Tech Advocates. This group of senior leaders in the tech community is created to champion and accelerate the growth of the local technology sector.

I am also a fan of the CrowdfundingHub and Crowddialog in Europe, and Ingressive in Africa for similar reasons: Ordinary people doing extraordinary things because they believe in the positive impact of innovation in finance. My peers are all trailblazers in the alternative finance industry, I consider myself to be in great company.

Advice for others?
I strongly believe in collaboration, so building business relationships is key. I truly foster my relations. To me it doesn’t feel like work, but rather like building bonds. Seek opportunities to connect and reach out. It really pays off to have a strong network. At MatchBox, I work with a network of exceptional local experts. If you need advice and consulting on your funding strategy, impact investing program or crowdfunding strategy, we will gladly work with you. Contact us at MatchBox.

If you’d like to get in touch with Suzanne Wisse – Huiskes, please feel free to reach out to her on LinkedIn:

To learn more about MatchBox Consultancy, please click here.

To learn more about  Global Tech Advocates Network, please click here.

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