Spotify case study PDF

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Table of Contents Introduction:.................................................................................................................................2 Business Strategic:.......................................................................................................................4 Marketing Strategy of Spotify:....................................................................................................8 Conclusion:..................................................................................................................................8 References:...................................................................................................................................9

Introduction: Spotify is an app which streams music, podcast, music videos, documentaries, etc. Spotify is available worldwide and can be used with most smartphones and on most computer a social device as listeners can link up to share music playlists videos and podcasts together it's a great way for up and coming artists to be discovered and it has millions of users worldwide. Spotify’s vision is to be “a cultural platform where professional creators can break free of their medium’s constraints and where everyone can enjoy an immersive artistic experience that enables us to empathize with each other and to feel part of a greater whole” (Garcia, 2019). Through its corporate value system, Spotify aims to conduct itself as “Innovative, Collaborative, Sincere, Passionate, and Playful” (Spotify: Most innovative company). The company’s mission statement, vision, and values make it clear that its value proposition is to provide listeners with access to a personalized listening experience that is created through empowering creators.

Spotify hopes to encourage free users to convert to paying users. The paid subscriptions are entirely free of ads and the listening time is unlimited. An unlimited subscription of $4.99 per month allows for unlimited access to their catalogue on a desktop computer; a premium subscription of $9.99 per month offers unlimited listening and allows users to access Spotify on mobile devices and offline access to playlists” 7 According to a source, the conversion rate from free to paid is about 25 percent. 8 Spotify distributes back 70 percent in royalties “based on a pro rata share in accordance with the popularity of a piece of music”. (Spotify revenue and Usage (2022) .This is paid out to whomever owns the rights to the music. In some cases, the artist owns

the master recordings. In most cases, a record label or distributor owns these rights. The amount Spotify pays out is a renegotiated rate per-play or per-percent of revenue for streams. Although every artist receives different royalties depending on deals made with their label and distributor, on average, this amounts to $0.004 or just under half a cent per stream.

Fig:spotify introduction

Business Strategic: Spotify has strengths built around its respected brand name, agile organizational structure, large user base, and algorithms that give users a personalized listening experience. The weaknesses of the company include its bargaining position relative to the powerful music rights holders and its lack of size and financial resources compared to its competitors. (Gupta & reader, 2021)The company has several potential threats to its position at the top of the audio streaming industry, including changes in prices of music rights and changes to data collection policies. Finally, Spotify has the opportunity to capture new users in emerging markets and existing markets by providing its users exclusive content that could lower its cost structure and realize a new area of differentiation. Spotify’s business model relies on key partnerships with music rights holders and artists. The company must obtain licenses, a key resource, to stream music from the music rights holders and strives to build a relationship with artists based on transparency and fair compensation. The other key resources for the company include its employees, user data, and proprietary algorithms that provide personalized recommendations to customers. From a top-level perspective of its business, Spotify Technology S.A. has a platform business model, which is a major category of business models. (AG) A platform business exploits the advantages of network effects for organizational development and strategic management, especially in implementing generic strategies for competitive advantage and intensive strategies for growing the streaming music marketplace. For example, Spotify benefits from more artists and music consumers using its online service as the business expands globally. Still, theory and practice show that a company can have one or more business models or a combination of different designs for business modeling. Thus, from a more specific perspective of the ondemand digital content streaming business operations, Spotify’s business model design has the characteristics of the following business models:

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Network effects business model and network orchestrator business model

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Freemium business model

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Unlimited subscription business model

Fig: business strategy of Spotify

Global Strategy: Spotify operates with a broad differentiation generic strategy by offering a wide range of music that appeals to a large market of listeners and differentiates itself by providing personalized playlists and music recommendations to users. The company offers Spotify Free, which is based on ad revenue, and Spotify Premium and HiFi, which are based on subscription fee revenue. “Local Music, Global Audiences” Spotify leverages data from its user base to find and track rising local artists, which they then promote to a global audience. The purpose of this is twofold: not only will that audience find artists they recognize on Spotify, but those local artists can use Spotify as a step towards gaining a global audience. The benefit for Spotify comes from local users finding familiar music on the platform, global users finding new music they would have never found without Spotify, and artists flocking to Spotify as a means of reaching a wider audience. One way these artists can be found is through Spotify’s Discover Weekly playlist, one of its most popular features. Discover Weekly factors in many users’ playlists in relation to individual’s genre taste. The result is a finely tuned playlist that lets users discover songs from unknown artists, many of whom come from other countries. This playlist melts away borders by revolving around genres. If a local artist in Germany is a rising pop artist, there’s a good chance someone in Brazil who likes that genre can find them with ease. Spotify is also big into charts. Users can search the Top 200 and Viral 50 global songs dating back to 2015. (Group) Spotify offers ever-changing playlists with the most popular music globally, and in each country. These playlists are an example of how Spotify localizes its content while also globalizing its artists—the playlists appeal to people in a target country, but they also reach out to a global audience.

Fig: global data of Spotify

Marketing Strategy of Spotify:

Spotify has made the freemium model available on phones and desktop computers or even laptops. Users will receive an ad every three to five songs. These advertisements are a way to generate revenue for the company. No free user can skip the ad or play in shuffle mode or even skip through songs without an ad.Although this advertising can get irritating after a time, most individuals enjoy getting free items and want to tell their friends about it.Spotify is being talked about among brand marketers in the hopes of marketing their brands through the service because it has a platform that can promote to millions of consumers. The second way of marketing that Spotify uses very constantly is collaborating with artists. This not just increases their audience base but also gives them exclusive content. This is a very familiar technique but not very often used. Spotify not only included visual and audio elements in their songs for free, but it also made the artist’s work more accessible to their listeners. Which is a major reason that more and more artist small to big want their music to be published on Spotify. Because the streaming service is becoming increasingly competitive, all businesses must work to provide value to their customers. Spotify appears to be producing excellent content that people appreciate and maintaining that momentum by providing the most tailored experience possible to clients. That is what makes Spotify so exclusive from all its competitors.

Conclusion: The report provides a strategic recommendation to Spotify based on the company’s strengths and weaknesses and the opportunities and threats in the music streaming industry. Spotify currently has valuable and rare resources that provide sustained competitive advantage for the company; however, the company provides music content that can be found on any other music streaming service.

References: Fox, G. (2020, April 21). Spotify business model: 3 ways its Transforming Audio. GARY FOX. Retrieved January 29, 2022, from https://www.garyfox.co/spotify-business-model/ AG, S. (n.d.). Spotify business model. Strategyzer. Retrieved January 29, 2022, from https://www.strategyzer.com/business-model-examples/spotify-business-model Gupta, J., & reader, J. G. A. fervent. (2021, December 16). Spotify business model: How does Spotify make money? Fee dough. Retrieved January 29, 2022, from https://www.feedough.com/how-does-spotify-make-money/ Spotify: Most innovative company. Fast Company. (2000, January 1). Retrieved January 29, 2022, from https://www.fastcompany.com/company/spotify Spotify revenue and Usage Statistics (2022). Business of Apps. (2022, January 19). Retrieved January 29, 2022, from https://www.businessofapps.com/data/spotify-statistics/ Group, U. L. (n.d.). The Spotify localization strategy. United Language Group. Retrieved January 29, 2022, from https://www.unitedlanguagegroup.com/blog/spotify-localization-strategy Sharma, T. (2021, August 3). Spotify marketing strategy creating its sound of Success. Marquee. Retrieved January 29, 2022, from https://marqueex.com/spotify-marketing-strategycreating-its-sound-of-success/

Anonymous. (2021, January 27). Spotify Mission Statement 2022: Spotify Mission & Vision Analysis. Spotify Mission Statement 2022 | Spotify Mission & Vision Analysis. Retrieved February 3, 2022. Menno, T. (2021, July 28). Collaborative learning through peer to peer learning is helping Spotify Speed up innovation. Medium. Retrieved February 4, 2022, from https://ideas.plusplus.co/collaborative-learning-through-peer-to-peer-learning-is-helpingspotify-speed-up-innovation-d5da296d804a YouTube. (2021, March 2). Spotify techbytes: Collaborative Learning as a way to speed up innovation. YouTube. Retrieved February 4, 2022, from https://www.youtube.com/watch? v=4jckqGVtyAA Cnbc. (2020, July 18). How Spotify dominates Apple, Google and Amazon in Music. YouTube. Retrieved February 4, 2022, from https://www.youtube.com/watch?v=6viSSo12-PQ Spotify: Most innovative company. Fast Company. (2000, January 1). Retrieved February 4, 2022, from https://www.fastcompany.com/company/spotify A framework for disruptive innovation in a ... - diva portal. (n.d.). Retrieved February 4, 2022, from https://www.diva-portal.org/smash/get/diva2:858101/FULLTEXT01.pdf...