SPOTIFY

Spotify



Executive Summary1

Introduction2

Use of Theoretical Perspectives3

Analysis4

Porters Five Forces Model4

Industry Rivalry4

Threat of Substitutes5

Threat of New Entrants5

Bargaining Power of Customers5

Bargaining Power of Supplier6

PEST Analysis6

Political6

Economic6

Sociological7

Technological7

SWOT Analysis7

Strengths7

Weaknesses8

Opportunities8

Threats8

Conclusion and Recommendations9

References11

Executive Summary

Spotify was formed in 2008 as a music service provider. Since then, it has emerged as one of the best providers and is fast becoming the top service provider in the world. With the number of users continuously increasing, it has emerged as a favourite to users in USA and Europe. Spotify has an advantage over several competitors since the music is provides to customers are protected and it pays the record companies and artists for using their music. This cost alone eats up a major portion of the company's revenues however; it has been able to make a profit recently (Shontell, 2011).

Spotify

Introduction

Spotify is a DRM-protected music streaming service providing music from companies such as Universal, Warner Music group, EMI, and Sony. It was launches in Sweden in 2008 and since then it has 20 million users out of which 5 million pay monthly subscription fees and a million of whom are US nationals (Lunden, 2012).

According to the Statistics unveiled by the co-founder and SEO, Daniel Ek, the paid subscribers in the United States are its main customers since it had made the company the largest of its kind in the country and since its key focus was on the United States market, it believes that it is on the correct road to success.

It gives users a vast range of songs on their home entertainment systems, tablets, computers, phones, and other devices. It also allows users to share, browse, and manage their collection and allow their friends to view them. Advertisement opportunities are also provided to companies thus serving as an alternate source of income generation (Bloomberg Businessweek).

During 2010 and 2011, Spotify launched three new services; these include Spotify free, Spotify unlimited, and Spotify premium. The free service allows 10 hours of music a month except for the USA and UK which are allowed unlimited free usage; however, this service comes with advertisements which make it uninteresting for the customer in order to influence him to purchase the monthly subscription (Richmond, 2013).

It also includes a download service where premium subscribers can download their favourite music and also play music offline. This is a great feature as it allows access to millions of songs at low costs. In order to make the service more attractive, it has prepared Facebook and Twitter application which allows users to easily share their playlists with others and discover new songs.

Out of all the earnings, 70% get forwarded to rights holders. This is a huge amount of their revenue due to which they were always finding it difficult to make a profit until recently. Due to the speed of growth, the amount paid to rights holders have doubled to a billion dollars in the past nine months. This has also make it lucrative for artists and rights holders because of which artists such as Metallica have placed their ...