Spotify is one of those great streaming applications that lets you access music with just a click of a button, offering a wide range of music either for free or for a small fee. People are drawn to such streaming services because of the convenience and value they provide.
If you're looking to create a Spotify alternative, you’ll have a number of key features to consider. You'll also need to take care of licensing as well as picking the relevant platform, technology, and functionalities to ensure your music streaming service is successful. In this article, we'll help you understand how to design and launch your own music service like Spotify.
Are media streaming apps a good investment?
Music streaming is becoming an increasingly popular and rapidly expanding industry in the entertainment sector, with a bright future ahead. According to research, more than 14% of people use music streaming apps multiple times a day, and the market is only expected to grow, with a CAGR of 14.7% between 2020 and 2030. Music streaming apps are thus a great option for those who want to take advantage of a constantly growing market.
Spotify is the undoubted market leader among the music streaming services. Other important market players include: Apple Music, Amazon Music, Tencent Music, YouTube Music, NetEase, Deezer and Yandex.
Furthermore, modern technologies such as 5G streaming, VR, AR, AI, and more are being integrated into popular streaming app services. An example of this is MelodyVR, which offers a wide range of live shows that can be experienced through VR headsets. This creates a lot of potential for those with revolutionary ideas to put them into action.
The business model of Spotify
Spotify was created in 2006 in response to a growing piracy problem. Entrepreneurs Daniel Ek and Martin Lorenzton wanted to support the music industry by offering users a convenient access to their favorite songs online, legally. Since then, the app has grown to become the most popular music streaming service in the world. Here’s a breakdown of music streaming applications market share:
- Spotify: 31%
- Apple Music: 15%
- Amazon Music: 13%
- Tencent Music: 13%
- YouTube Music: 8%
Spotify offers a freemium service, with a basic, limited, ad-supported version free and an unlimited premium version that requires a subscription fee. Since its launch in 2006, Spotify has paid close to $10 billion in royalties to music labels and has seen its premium subscriber base grow from 10% of total users in 2011 to 46% in 2018.
Spotify's success lies in its ability to convert free users to paid users, with additional features and no advertising. Premium users now generate 90% of the company's total revenue, and the premium subscriber churn rate has fallen to a record low of 4.6% in 2019. Spotify pays record labels close to 52% of the revenue generated by each stream, with over 85% belonging to four major labels. In 2018, Spotify paid €3.5 billion in royalties for premium users and €0.5 billion for free users, accounting for 74% of overall costs.
The company has successfully shifted the industry from music downloads to streaming, and has disrupted Apple iTunes in the process. For the first time in its history, Spotify made a profit in 2019.
Essential features of an audio streaming app like Spotify
An app like Spotify would offer a number of features that enable hassle free-listening as well as some additional perks, such as personalized playlists. Take a look at these features:
Registration and sign-in
Starting to use a music streaming service should be easy and hassle-free. Allow users to register free-of-charge and customize their experience, and link their account to their social media networks for easy subscription and the ability to search for their friends who also use the service..
This endpoint provides complete data about each user's profile and authorization, such as email address and password. Spotify also offers basic account customization options, such as setting a user profile picture. This is also where users would store their payment information in case they become paid subscribers.
Audio streaming is a feature that allows users to listen to music or audio content over the internet without having to download the files first. With this feature, the audio is delivered in real-time as it is being played, and the user can start listening to it immediately.
The audio streaming feature works by breaking the audio file into small chunks, which are then sent to the user's device over the internet. As the user listens to the audio, the next chunk is sent, and so on. This allows for a smooth and uninterrupted listening experience, even with a slow internet connection.
The users should have access to curated playlists. They should also have the ability to manage their own playlists and enjoy endless playback of their favorite audio tracks. Users will also want to create their own personalized playlists within the music app for greater convenience.
Curated playlists offered by Spotify certainly contributed to the app’s success. Discover Weekly and Release Radar are built with algorithms oriented at helping users discover new music that is in accordance with their taste.
The search function in Spotify allows users to find and discover music within the Spotify library. It allows users to search for specific songs, albums, artists, playlists and also Podcasts. It also allows users to filter the results by different criteria, such as popularity, release date, and genre.
Push notifications in Spotify can include information about new releases from favorite artists, upcoming concerts or events, personalized recommendations based on listening history, and other updates. This can help users stay up-to-date with new music and discover new artists and tracks they may be interested in.
Push notifications can also be used to send messages about account activity and updates, like subscription expiration, payment details, and other account related information.
The download function in Spotify allows users to download songs, albums, playlists and podcasts to their device, so they can listen to them offline. This feature is only available to Spotify Premium subscribers.
When a user downloads a song, album, or playlist, the music files are saved to the device's storage, and can be accessed and played even when the device is not connected to the internet. This allows users to listen to their favorite music or podcasts on the go, without the need for an internet connection.
Features that will add a competitive edge
To add a competitive edge to an app like Spotify, the app could include the following features:
You can make your music app more engaging for users by adding verses from songs, personalizing their listening experience with added interest. Spotify uses Mixmatch licensing, but it’s also possible to benefit from AI technology to add a feature that displays song lyrics during playback, keeping customers more engaged with the app.
Calendar of music events
Customers can take advantage of this option to stay up to date with the upcoming live audio shows and podcasts of their favorite arrangers and musicians. This ensures that they do not miss any of the live or on-demand events and can always come back to your music streaming app.
Video podcasts were made available on Spotify in April 2022. Allowing users to watch their favorite music videos via the streaming application will certainly add a competitive edge. The app could also include concert live streams. However, this feature would involve additional tech stack considerations. To understand the implications, refer to our earlier guide to building video streaming services.
Building a Spotify alternative in 7 steps
Building a Spotify alternative involves several steps, including the following:
Step 1: Conceptualize your Spotify alternative app
This includes determining the features and functionality that the app will have, as well as creating a plan for the overall user experience. It’s also crucial to understand your target audience, as without this understanding you risk building a product that won’t be useful.
Step 2: Pick the right business model
If you're looking for the best way to monetize your product, you'll need to identify its unique value, which will allow you to select the right pricing strategy. We've written an article about SaaS pricing models that can help you make the right choice – there are lots of different options to choose from, and you can be as creative as you like.
Step 3: Take care of music licensing
In order to build a music streaming service like Spotify, one of the most important considerations to make is ensuring that you have legal audio content. If you are targeting the US market, you will need to obtain a Public Performance Right from either the American Society of Composer, Authors and Publishers (ASCAP) or Broadcast Music Incorporated (BMI). If you want to reach the European market, it is necessary to obtain a license from European Stage Authors and Composers. Spotify has actually gone a step further and established direct licensing deals with major record labels, such as Universal Music Group and Sony Music Entertainment.
Step 4: Choose the tech stack
Spotify is a proprietary closed-source platform, so the company does not publicly disclose the full details of their technology stack. To build a similar app, we suggest using the following tech stack:
- Cloud platform such as AWS or Google Cloud
- CDN such as Amazon CloudFront
- Back-End language/technology such as Node.js, Java, or Python
- Database such as MongoDB, MySQL, PostgreSQL or Cassandra
- Search engine such as Elasticsearch or Solr
- Front-End technology such as React or Angular
- Container technology such as Docker and Kubernetes
- Message broker such as Kafka or RabbitMQ
- Streaming technology such as Wowza, Red5
- Payment gateway such as Stripe or PayPal
Step 5: Work on the design
This step involves creating wireframes, mockups, and other visual elements for the new app. Creating a great user experience is key to attracting and keeping users interested in your app. Spotify's design is simple and straightforward, which makes it easier for users to sign up and get started quickly. We recommend implementing the same strategy with your app's design. Additionally, a well-crafted app onboarding system can help to boost user engagement with your application.
Step 6: Develop the app
This step involves writing the code for the app using a programming language such as Swift or Kotlin for iOS and Android, or React Native for cross-platform development. It should also involve thorough testing to ensure that it functions correctly and has no bugs or other issues.
If you aren’t concerned about the budget, you can opt to hire an internal team of developers or hire experienced developers on a part-time or full-time basis. Outsourcing is usually the more cost-effective option since you don't need to commit to long-term staff contracts. At RST, we have a wide variety of highly-skilled professionals available to support you in your projects.
Step 7: Release and maintain your app
This step involves publishing the app to the App Store or Google Play, updating the app as necessary and providing customer support.
These are just high-level steps; each of them will have multiple sub-steps and might require different team members like designers, developers, QA and project managers to work together. This can be time-consuming and requires significant resources, including funding. Moreover, building Spotify alternatives is quite complex as far as sound quality, extensive traffic and music library are concerned.
Building a Spotify alternative with RST
Building a Spotify alternative app can be challenging, as it will require a significant amount of resources, including time, money and expertise. There are several factors that can make building an app like Spotify difficult, including complex functionalities (such as video streaming), scalability and music licensing. The key to success in this saturated market is to identify a gap in the market and build an app that addresses that gap in a unique and desirable way. I recommend seeking the help of experienced professionals in the industry if you wish to build something to compete with Spotify. If you'd like to benefit from our experience and expertise in building streaming applications, contact me directly at email@example.com and I will take it from there.