Spotify's main difference was the ability to play any music on-demand, where Pandora only offered radio-style playlists with limited options to skip songs. Spotify executives took aim for that same pool of money, calling advertising “a huge part of the company strategy.” Both companies offered a paid subscription option.

Spotify aimed to emulate that success, but with a different model that also included an odd consumer option: a subscription.Īt the time, Pandora, the market leader in music streaming, had already positioned itself as the future of radio, going after the industry’s $17 billion advertising market. But companies like Google, Yahoo, and Facebook were able to grow very large, very quickly by attracting big audiences to their free services and selling ads. Sure, everyone knew ad-based models-sometimes called “the Internet’s original sin”-had flaws. In 2011, when Spotify launched its streaming music service in the U.S., the future of digital media lay squarely in the realm of advertising.

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