...1. a. The firms for which Spotify’s new business model is a threat are traditional music outlets, like record stores and chain retailers with music sections, and even online retailers like iTunes. Even though record companies have also partnered with Spotify to distribute their music, it is possible that it will cannibalize their other channels of distribution, like brick and mortar retailers and even radio stations. Radio stations, too, will be drastically affected by an increase in the success of Spotify’s new business. While people listening to AM and FM radio, or even Internet radio stations, generate revenue for the radio stations by creating an advertising audience for local and national advertisers, Spotify’s success will certainly steal market share for broadcast listeners. Less obvious examples of businesses that might be affected are television stations, because an increase in control of music choice might increase music listenership and take away from television viewing. b. An example of this from history is how iTunes changed the music distribution model by making brick and mortar sales of music nearly obsolete. Record stores haven’t fared well in the 21st century because of the increase of sales in the iTunes store and other online retailers. c. There are barriers to entry for other firms using the same business concept, because they, too, must negotiate contracts with record labels and figure out a revenue model that pays for the cost of royalties...
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...Spotify Tyler Hampton CIS/207 9/22/2014 Alan Basa Spotify The core goal of Spotify is to provide a library of all the world’s music accessible from a desktop or mobile app. Users have instant access to the music library via search, radio, bookmarked playlist, and other users playlist. Spotify is also a social platform that allows users to interact and share music. Spotify is challenging the culture of the music industry by embracing access over ownership of music. Steaming music is being widely accepted by music listeners but the future of Spotify hinges on becoming a profitable business model, convincing consumers that music is worth paying for. Streaming music is changing the ways people listen to music. Instant access to virtually any artist or song allows users to spend less time acquiring music and more time focused on what to listen to. Spotify allows user to add a song to playlists with the click of a button. Spotify takes advantage of big data to provide recommendations tailored to the users taste and helps users discover new music. The discovery process is supported by the various ways a user can choose what music to listen to. The search function allows users to access an artist complete discography or a specific song. Radio plays music that is similar to a selected song, artist, or genre. Browse allows users to access Spotify generated playlist based on genre, new releases, billboard charts among other categories. Users can star tracks, instantly adding...
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...paid model is also a weakness, creating a larger issue of poor finances (Dredge, 2015), also as a result of the reliance on advertising income. This limits the amount of capital available for reinvestment. Opportunities for Spotify include building stronger relationships with artists and consumers, to gain a larger market share and to increase paid subscribers. This can be completed through education and further diversification in the market. Also seeking to launch in developing countries such as Africa, like they are in Japan (Music Week, 2015), could increase market share and profitability. Competitors within the market including Pandora, Deezer and Apple Music are all threats to Spotify (Dredge, 2014). The rapid changing technologies and developments could threaten Spotify’s position as market leader because Spotify have poor finances for reinvestment to keep up with competitors. Finally, piracy and competitors like Songza (Songza, 2015) which offer music without advertisements for free, are ongoing threats, seeing potential consumers seek alternatives to Spotify. Firm Analysis At the moment Spotify is the market leader for music streaming services and has achieved this thanks to its unique resources: the people. A golden rule at Spotify is “hire great...
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...STRENGHTS | WEAKNESSES | ● Spotify ‘s revenue guarantee for music publishers and providers thanks to streaming advertising● High music base to attract and maintain users. : playlists are easily created, have choice of any music and listen music for free● Easy to use and fast playing● Available on many platforms to allow as much as possible users having access. Spotify connect with Facebook so that you can share your music through there, spurring their growth, doubling users 10m to 20● Good reputation with a considerable branding : partnership with other brand : WDTVlive, Shazam, recently Uber | ● Strongly affected by relationship with artists : all artists are not present anddependent on artists to publish updates and new albums● Technical limits can cause large scale revenue and reputation loss : Spotify recorded an operating loss of €165.1m (£119m) in 2014 compared to €91.2m (£65.7m) in 2013,● Depend on mass advertising for income (revenue generated by advertissing split 30/70)● Persistence on premium subscriptions for full mobile services and access to files limits its appeal to consumers used to accessing free music : have to pay £10 a month to be able to use it, which some people may not want to do considering you can use iTunes for free.● Some Countries are not supported● Expensive royalties (pay out each month 70% of its total monthly revenue) | OPPORTUNTIES | THREATS | ● Higher quality content with the continued evolution of mobile technology...
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...Spotify Analysis Sarah de Ferrari, Danielle deFerrari Bryce Simantel, & Christine Osazuwa 1 Spotify is a music streaming platform that was founded in 2006 in Sweden by Daniel Ek and Martin Lorentzon with the goal of providing music to everyone. They worked with a Swedish developer experienced with peer-to-peer framework with the intent of connecting the music listener directly to the labels. Due to the nature of that relationship there is a need to negotiate with music labels for launch on a country-to-country basis, starting with their initial launch in Sweden in 2008. They are currently available in 57 countries with a limited launch currently underway in Canada and the Phillipines. The basic service offered by Spotify is the ability for users to create custom playlists that can be played through any internet connection. Spotify has two distinct product offerings, Spotify and Spotify Premium. Spotify Premium members pay a monthly subscription fee but have access to their playlists offline on multiple devices, thus having all the perks of owning the music while just paying $120 a year. Beyond that, Spotify is known for their social media interaction – users can interact with their friends and share playlists, and users can also follow the playlists of their favorite artists. Songs can be found by title, artist, or cd name, and various apps are available to enhance the service, such as radio streaming. Sean Parker, founder of Napster, invested $15M in Spotify...
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...mobile phones and the advantage it has had on the people, the many different game consoles around and other things such as the transition between VHS to DVD’s and the introduction of BluRay and Bluetooth. Two major impacts on the media industry for both positive and negative effects, have been the iPod and the music sensation, Spotify. Both have created a large hype within the media industry for several different reasons, and are both appreciated and cursed by the audience of today. Spotify is a downloadable window, where if you have internet connection, you are able to stream music for free. There are many positive effects that come with Spotify. You are able to listen to music anywhere, due to a new app that can be downloaded to any Android phone. On Spotify, there are two different subscriptions that are available. One can either pay for “The Ultimate” or “The Premium” or, alternatively, one can opt out of subscription, pay nothing, and have ten hours of free streaming per month. These options are appreciated by today’s music listeners as they are able to decide which one best suits them and caters best to their needs. Many people prefer the use of Spotify as opposed to iTunes due to the fact is not only compatible with Windows, but is also compatible with most Apple products and most mobile phones, including Blackberries,...
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...History of Spotify Inc. The story behind Spotify’s success is similar to many companies that go on to achieve great things: it dramatically changed the industry, reducing illegal file-sharing. Spotify had been in development since 2006, by a company in Sweden called ‘Spotify AB’. It was founded by Daniel Ek, who was formerly the CEO of Stardoll, and Martin Lorentzon, co-founder of TradeDoubler (Streatfield, 2015). The name Spotify was decided using a combination of the words “spot” and “identify”. The Spotify application was launched on 7th October 2008. Whilst free accounts remained available by invitation to manage the growth of the service, the launch opened paid subscriptions to everyone. At the same time, Spotify AB announced licensing deals with major music labels (The Spotify Team, 2008). In 2009 Spotify capitalized on its popularity by raising $50M and launching the mobile app. Spotify raised a lot of capital early on so it could pay off the record labels and pre-license plays from the major label catalogues. In 2011 Spotify announced 1.3M paid subscribers, 3M active users and it launched in the US. In 2012 Spotify was integrated with Facebook showing what consumers listened to, to their friends. In 2013 Spotify announced 20M active users and 5M subscribers (Streatfield, 2015). In 2014 the company launched discounts for students and family plans, and Taylor Swift removed all of her albums from Spotify due to the low royalties associated with streaming. In 2015 Spotify...
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...Spotify first appeared in the United States twelve months ago. A small Swedish import with a ‘freemium’ music streaming model and an interesting group of backers (including ex-Napsterer Sean Parker), Spotify was a highly anticipated new product. Indeed Spotify raised money last week from Goldman Sachs at a cool $3bn valuation – almost as much as the financier Len Blavatnik recently paid for Warner Music Group, the 54 year old label of Led Zeppelin, Eric Clapton, P-Diddy, and Jason Mraz. And yet, there are many left unsatisfied. Artists such as Lady Gaga complain about the pitiful $160 she received from 1 million plays of ‘Poker Face’ on Spotify. Consumers complain about the $10 per month price tag to get Spotify on their smartphone. Labels haven’t said much. Yet. The truth is that Spotify is a good revenue generator for labels – indeed many reports suggest Spotify is second only to iTunes in terms of revenue generation, yet at what cost? The Beatles, AC/DC and, more recently, Coldplay have all held content off Spotify, presumably because of the age-old industry fear: cannibalization (especially of traditional iTunes download sales). The history of the music industry has been typified by a fear of cannibalizing existing sales: vinyl cannibalizing live; CDs cannibalizing vinyl; downloads cannibalizing CDs. Is this simply another case of fear holding back labels and artists from embracing a new model that’s inevitable? As Steve Jobs famously said, “If you don’t cannibalize...
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...SPOTIFY An Analysis of Spotify’s Market Strategies Spotify Spotify AN ANALYSIS OF SPOTIFY’S STRATEGY Spotify is a Swedish online music streaming service that was launched in 2008. Since, its launch Spotify has had a meteoric rise and currently boasts a library of around 15 million music tracks and about 20 million users. Though Spotify still lags behind Pandora, the market leader, it is interesting to understand how Spotify managed to succeed in the competitive music streaming industry. The following report will start off by giving a brief overview of the music industry, Spotify’s features and the competition Spotify faces. We will then analyze how Spotify managed to succeed in the competitive music streaming industry. Finally, we will discuss the risks Spotify faces and future strategies it could undertake in continuing its success in the online music streaming industry. DIGITAL MUSIC INDUSTRY The digital music industry can be divided into two submarkets: the streaming market with numerous competitors and the digital download market dominated by iTunes and Amazon. Digital music industry revenues have grown by 8% in 2011 reaching a valuation of $5.2 billion. Currently the streaming market only generates 10% of digital music industry revenue but the growth rate of this market is greater than the growth rate of the download market. Competition within the streaming industry is very strong as many companies operate in this market with similar business models. Companies...
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...Project Summary Introduction Spotify is an online commercial music streaming platform that, despite earning a massive sum of Euros in 2012, has never recorded any profit ever since its launch in 2008. Royalty costs and increases in licensing costs cover most of Spotify’s expenses, and these fees continue to be a problem as it prevents Spotify from making a profit. Purpose This paper aims to improve Spotify’s strategies in order to make its business more profitable. Method This paper will use secondary data to analyze both Spotify’s external and internal environments. The main tools used here are: PEST, SWOT and the Five Forces analysis. The paper will give insight into Spotify’s pricing and advertising methods, suggesting ways to make it more appealing to the everyday user and how to draw more customers in more efficiently. We will evaluate how long-term subscriptions and bonuses may keep a subscriber loyal to their services. Lastly we will look at how redeveloping their website can make it look more professional as well as make it easier for customers to find out information about Spotify. Conclusion At the end, this paper indicated that Spotify should lower its prices, collaborate with phone operators, reward loyal customers and implement bonus periods, as well as invest in smarter advertising and a better, more professional website. TABLE OF CONTENTS 1. Organization Overview 1.1 General information 1.2 Mission, vision and values 2. Strategic...
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...Benedictine University International Marketing INTB 350 A Proposal For Spotify To Open a Fully-Owned Subsidiary in Canada By Michael T. OSTROWSKI Vincent PETRINI-POLI December 9, 2013 Senior Lecturer Table of Contents Introduction 2 About the Author 3 Spotify 4 The Spotify Service 8 Target Markets 11 Comparison Matrix 15 Entry Strategies 20 Market Responsiveness vs. Cost Responsiveness 22 Financial Aspects 24 Conclusion and Recommendations 26 Exhibits Ex. 1 – Resume 27 Ex. 2 – Company Information 30 Ex. 3 – Service Information 31 Ex. 4 – Country Information from Cia.gov Canada 34 Russia 35 Japan 36 Ex. 5 – Cultural Aspects 37 Ex. 6 – Country Selection Matrix 37 Ex. 7 – Political/Economic Risks Diagram 38 Ex. 8 –Entry Strategies 39 Ex. 9 – Cost Responsiveness vs. Market Responsiveness 39 Ex. 10 – Financial Aspects 40 Ex. 11 – Internet/Media Excerpts 41 Ex. 12 – Power Point Presentation 43 Bibliography 44 Introduction As the world population continues to grow, technology continues to progress, and innovation starts to reach new heights, the need for globalization increases every day. Thanks to advances in modern communication, production is now a global process and aims to reach new consumers across...
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...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...
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...1.DEGREE OF RIVALRY Spotify faces a moderately high competition. The number of rivals is seeming to increase as the disruption initially created by the technology seems to settle and competitors start to imitate and accommodate their offerings. The competition is not necessarily in price and tends to balance on the side of the premium services offered. Competitors Profiling Spotify’s biggest rivals are Apple Music — Based on what was before Beats Music. Includes a paid service, a live radio station called Beats 1 and a social component. It is available on over 100 countries and available on Apple devices as well as Android or Windows operated gadgets. The fees charged are $9.99 for a single license or $14.99 for a family license. It does not have a free version, but offers three month trial. Pros: Playlists are made by experts, not algorithms. Apple Music users have access to new tracks and videos uploaded by artists themselves. Has Taylor Swift's blessing, after a reversal on royalty payments. Cons: The features are not wildly different or better than Spotifyàs or Rdio’s so it is hard to justify Jimmy Lovine’s (Apple music excecutive) service will be "revolutionary." But it could still use its clout to bring streaming to the masses. Thus increasing the degree of rivalry in the market to the detriment of overall profitability. Tidal Jay Z bought for $56 million in 2015 and the service is available in over 44 countries. It costs $9.99 a month for normal streaming...
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...Spotify Case Study 1. What do the changes in the marketplace mean for the music streaming industry? Is that even the right definition of the industry? a. Spotify has gained recent competition with entities such as iTunes Radio and Beats By Dre, meaning that music is becoming more accessible to the general public without having to pay for each individual song you want to hear. People are catching on to Spotify’s idea of a monthly flat rate, which is creating more competition in the industry. Furthermore, it is has been discovered that this could be ‘inherently unprofitable’ for Spotify because their margins do not increase as they become larger. Yes, it is an industry because they do produce goods for a certain market. 2. What is the structural attractiveness of this industry? b. The fact that music fits in to everybody’s life makes it an attractive industry because many people basically need it in their day-to-day life. Whether it be driving, working, exercising or just relaxing at home, many people listen to music throughout their daily activities. There was a large opening in the industry because most other options were significantly more expensive than Spotify, so they attracted a large amount of customers very quickly. The idea of streaming music is still catching on, but it is a huge breakthrough in the music industry as a new way to listen to music on the ‘cloud.’ 3. How effectively has Spotify built and adjusted its...
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... 10 Appendix C and D 11 Market Analysis In appendix A show that CD is used to be the most effective format contributed to music industry in 2003 at 94.8% of revenue in industry. Due to the development of technology, there are alternative way to get access to music such as Internet download, subscription and streaming, which increasingly dominate the music industry. Appear continuously decrease in CD revenue to 62.3% and 35.8% in 2008 and 2012 respectively (MarketLine, 2013). While another format that indicate increase in popularity is subscription and streaming sector for instance, Youtube, Spotify, Deezer, and Vevo etc. Size of market can demonstrate via global...
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