Here's a product strategy puzzle for the IIM textbooks: In India, Spotify dominates paid music streaming despite YouTube Music being objectively superior. YT Music costs less, includes ad-free YouTube, has the best recommendation engine, and taps into YT's massive 450M active users. Yet Spotify holds a higher paid music streaming market share and keeps growing.
Turns out the answer isn't in the product. It's in the peer group. YT Music sells features and value. Spotify is selling identity, validation and FOMO. And we love signalling more than anything.
It started with Spotify Wrapped that quickly became an annual ritual globally for users to flood Instagram with their music taste scorecards.
Some users curate their entire year's listening habits just to craft the perfect Wrapped story, playing songs they'd never choose privately. Faking your music personality to fit in a social bubble.
I mean when did your music app become more important than the music itself? Meanwhile, YouTube Music users sit on the sidelines, excluded from the cultural moment.
Spotify weaponized sharing. Every feature is designed to make music consumption visible. Collaborative playlists, friend activity feeds, first to crack native Instagram Stories integration. And India lives on Instagram.
They turned private listening into public performance. In a country where social proof drives purchase decisions, being on the "wrong" platform becomes a social liability for young Indians.
Much like how iPhone users in the US judge Android users by their green text bubbles (vs blue), Spotify has created a similar in-group/out-group dynamic in India's music streaming market. Your choice of platform becomes a marker of social belonging.
YouTube has everything needed to win. But they're playing a product game in a social market. And this is also why Spotify is now moving up to become a social network.