While competition online starts the same way as that in offline markets, my research shows it often settles very differently online.

Both have seen lots of competitors emerge in a new area underpinned by new technologies. But online, consolidation ends in a high-stakes winner-takes-most "title fight" between the two strongest players.

In search this was AltaVista vs Google, in social media it was MySpace vs Facebook and in business networking Spoke vs LinkedIn. The result is that the victor at this critical juncture goes on to dominate their corner of the market and becomes almost unassailable in that space.

Facebook vanquished early industry leader MySpace in Social Media.Source: Online Gravity
Facebook vanquished early industry leader MySpace in Social Media.Source: Online Gravity

The evidence is mounting that Swedish music streaming company Spotify is on the verge of seizing the crown in music.


Pandora has been for some time the dominant real-time streaming service in the United States.

Three years ago it had a clear lead but competition from Spotify appears to be stronger than ever. Pandora was a mass market pioneer in the online "radio" style streaming format where users pick stations and the music is compiled for them, whereas Spotify adopted an on-demand model which has prevailed.

Spotify has created many features that has made it popular with users like the ability to create and swap playlists.

In the United States, Pandora has more monthly active users than Spotify, Shazam, Soundcloud and Amazon Music, according to App Annie. While Pandora has dominated in the United States its success in other markets has not been so strong. In Australia and New Zealand, for example, it recently closed its service and Jane Huxley, former managing director of Pandora Australia and New Zealand who resigned in March was just announced in the same role at Spotify.