Intro to Spotify
Spotify is a revolutionary software which allows its users to stream millions of songs on demand. Users can access music on computers, mobiles, tablets, cars and gaming consoles. Spotify was launched in 2008 by the Swedish entrepreneur Daniel Ek. Since its launch in 2008 Spotify has grew rapidly, available in 58 markets, upwards of 75 million active users of which over 20 million are paying subscribers, all with access to over 30 million songs. Subscribed users pay a fee of £9.99 a month which allows for ad free listening, highest quality audio and it allows the user to create and download playlists for offline listening.
Each time a user streams a song Spotify pay the rights holders royalties. Currently Spotify are paying 70% of their overall revenue to rights holders and have paid out more than $3 Billion USD in royalties to date.
SWOT analysis
Spotify’s biggest weakness is that artists argue they are not being paid fairly, the average amount the artist earns per stream is $0.007 as appose to £12 for an album. Taylor Swift’s decision to leave Spotify generated a lot of bad press damaging their reputation. Spotify’s argument is that they are paying the rights holders a fair price but it’s the record labels who are not paying artists fairly. Also they claim that paying subscribers are paying on average more on music monthly than if they were to pay for downloads and physical copies. Another weakness is that 90% of Spotify’s revenue is generated by paying subscribers, this puts Spotify under pressure to keep paying subscribers happy otherwise the amount the artist earns will decrease. This could result in further artists leaving Spotify, and possibly meaning that advertisers will invest less into Spotify due to loss of users.
With streaming being the most popular form of consuming music currently many other competitors have entered the market