Navigating an Industry In Transition, Investing in the Future of Music
At Sonos, we’ve always taken a long-term view. We design products to look and sound great in your home for a target of ten years, and to get better in that time. We made a bet that streaming would fundamentally change the way we enjoy music, and we organized ourselves to deliver the best experiences for listening out loud. We chose to fill the most space with the fewest speakers rather than to make the most gadgets for the smallest space; to deliver lasting experiences over disposable technology; to provide access to all the streaming services in the world, not just the most popular ones; and we chose to develop our products with WiFi instead of Bluetooth, which was far more challenging for our engineers but superior for our owners. These are all choices we stand by today. While often difficult in the moment, they ultimately serve Sonos, our partners and our customers well in the long run.
Today, the entire music ecosystem is in transition – ultimately for the better – and so is Sonos. We have a good idea of how this will evolve over time, and we’ve never been more bullish on what it means for music fans. But we also know that to continue to innovate and bring compelling new experiences to market, we need to invest heavily against the opportunity.
“We’re making a decision to substantially and confidently increase our investment in the future of music.”
Building a company capable of sustained innovation, steady growth and future vitality requires that we run the business profitably. We’re not chasing short-term gains or answering to impatient investors. Rather, we’re making a decision to substantially and confidently increase our investment in the future of music.
The short term – and very difficult – consequence of this decision is we’ve had to make some changes to our team. We do this with a heavy heart, as we are in the process of letting go of some Sonos employees who have played important roles getting us to this point. We wish them well, and we’re doing everything we can to make their transition as smooth as possible.
As we look to the future there are two big areas that we’re leaning into: paid streaming services, and voice control.
For the first ten years of Sonos, we focused on music lovers who had ripped music libraries on their computers, and helped them listen to these collections around their home.
We observed with great interest as the music ecosystem started to first test and then to organize around paid streaming music services. We pioneered the integration of these services starting with Rhapsody, Napster, Spotify, Google Play Music, and many others. At first, these services were confined to specific countries, but that improved over time as the labels began to see the success of the paid subscription model.
Then this past year, when Apple announced its entry with Apple Music, we saw and helped drive a dramatic acceleration of paid music subscriptions. With Apple’s influence, the entire ecosystem – labels, artists, management – began to embrace and advance streaming all over the world.
Now, this shift is irreversibly started, and everyone in the ecosystem is adjusting to a world of streaming services. The Beatles library, now available on all the streaming services, is a perfect example of how labels are leaning into streaming.
The shift is not complete as a few laggards continue to cling to fading business models, but it’s inevitable now. The only question that remains is how fast the growth of paid subscription services will be.
Now the path forward for the music industry is crystal clear, so too is our path at Sonos. We’re doubling down on our long-held conviction that streaming music is the dominant form of consumption now and in the future. We believe that listeners will grow increasingly dissatisfied with the solutions they’ve cobbled together for listening at home.
“Now that music fans can finally play anything anywhere, we’re going to focus on building incredibly rich experiences that were all but unimaginable when we started the company.”
Now that music fans can finally play anything anywhere, we’re going to focus on building incredibly rich experiences that were all but unimaginable when we started the company, and will be at the vanguard of what it means to listen to music at home. This is a significant long-term development effort against which we’re committing significant resources.
Voice: A simple and easy path to music in the home …
We’re fans of what Amazon has done with Alexa and the Echo product line. Voice recognition isn’t new; today it’s nearly ubiquitous with Siri, OK Google, and Cortana. But the Echo found a sweet spot in the home and will impact how we navigate music, weather, and many, many other things as developers bring new ideas and more content to the Alexa platform.
Alexa/Echo is the first product to really showcase the power of voice control in the home. Its popularity with consumers will accelerate innovation across the entire industry. What is novel today will become standard tomorrow. Here again, Sonos is taking the long view in how best to bring voice-enabled music experiences into the home. Voice is a big change for us, so we’ll invest what’s required to bring it to market in a wonderful way.
Our mission is to fill every home with music. I start every day by asking myself how we can do that better, and how we can serve our music lovers better now and over the long haul. We know the future is one where paid streaming and voice control play significant roles, and we’re committed to running a sustainable, profitable business so that we can fund innovation in these and other areas for decades to come.
These last few weeks have been tough for everyone at Sonos. We’re a tight bunch, so saying goodbye is particularly painful. But I know that making these changes is the right thing to do for Sonos as we look to the future.
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