Spotify, Case Study Example

Introduction

The main purpose, aim and objective of this paper is to provide analysis of the Spotify case analysis based on the Spotify vs. apple music articles provided.  The paper will also cover various new business models and how their introduction affects the music industry practices. Furthermore, the power of different stakeholders, the goal of innovation as well as the challenges innovators face in the digital era will be discussed in this paper.  From the case study in this paper it is true that Apple was going to embed Beat Music including the I Pads and the iPhone and this led to many challenges to the Spotify business operations.

Spotify Case Study Analysis

There had been rapid evolution of the music industry in the last twenty years mainly due to innovation and advances in technological practices in the current society. According to various research based reports and publications, iTunes and Spotify managed to become one of the dominant players in the streaming music industry due to their adoption of innovative and new technological practices in the music industry. Spotify competitive advantage includes its unique services provision in the music industry.  Creativity, innovation and provision of high quality music has led to high revenue generation in the Spotify firm. The business model adopted by Spotify also aims at promoting its profitability and revenue generation.

Based on Apple business activities and practices, I believe that Spotify should adopt proper record labels in order increase their free ad-supported tier systems for the users.  It is also worth noting that out of the total 60 million Spotify users only about 15 million mostly pay the $9.99 a month towards its services and products.  According to financial times reports and publications, Apple business activities and market share is posing a threat to the Spotify business operations.  This is because Spotify managed to generate more than $500 in June and only cut 30% of its total revenue from its music subscription services in the United States.

The firm also managed to cover a round 20 million paid subscribers and later include an additional of 55 million listeners to its free ad-supported services.  However, majority of investors argued that the firm is very likely to be crushed by Apple business strategies. This clearly indicate that Spotify managed a significant lead over its rivals in the music industry in the last few months.  Apple subscription services to its users goes at $9.99 a month and this is provides a clear development strategy for the Spotify.  Apple firm also plans to increase its royalty pay rates than Spotify and this may increase and promote Spotify competitive advantage in the streaming music industry.

Apple main intention is to use record labels approaches in order to increase its profitability and revenue generation and this will pose a great challenge self-sustaining firm such as Spotify firm. In addition, Spotify firm money generation is mainly based on the activities of the music copyright owners in the society. Some of these music copyright owners include the Vivendi’s Universal Music Group, the Sony’s Corp’s Music entertainment group as well as the Len Blavatnik’s Warner Music firm. It is also evident from a number of reports that Spotify should pay around 70% of its revenues in order to promote its royalties to record labels and other music publishers in the society.  In late 2014, the overall revenue in Spotify was more than 81% and this led to some loss in the firm.  There are also those who argue that abolishing and cutting the record labels will improve profitability of firms in the digital streaming music industry.

Another big challenge facing the Spotify firm include its small number of execs in the music industry and poor decision making activities in the firm. However, there are those who argue that spotify may be forced to match Apple’s record labels payments to the music industry and this may pose a challenge to the firm. It is also expected that by the end of 2019, Spotify firm will be able to increase its revenue generation from the current $3.4billion to around $8bilion.  One of the unique services provided by Spotify include its free ad-supported services which currently covers around 55million users globally.

Recommendations

In order to improve Spotify profitability and revenue generation, the firm should involve the use of new technological procedures and also apply high levels of innovation and creativity in its music download procedures in the music streaming industry.  This will promote attractive music services offered by the firm thus attracting more customers and users in the firm. The firm should also include video and podcasts technological platforms to its music streamlining procedures. This will allow Spotify firm to promote its competitive advantage over its major competitors such as Google and Apple firm. The firm should also expand its global radio market to various users globally in order to promote its revenue generation. The adoption of new and innovative record labels will also promote the firm competitive advantage in the music streaming industry.  The firm should also aim at providing unique and high quality services to both its freeloaders and paid subscribers in order to promote its profitability.  It is also imperative that Spotify include a variety of songs to its users and also works closely with various artists in the society to improve their music services and products.  The firm top management and directors should also create online platforms through which they can evaluate the feedback ad opinions of their customers and clients.

Conclusion

In conclusion, it is evident from this paper that Spotify is one of the upcoming firms in the streaming music industry besides Apple and Google firm. The firm is currently planning to include new innovative and technological procedures towards its business operations and services. It is recommended that the firm adopt and include video and podcasts platforms in order to improve its music streaming activities. Firms such as Apple has been successful in the streaming music industry due to its use of digital platforms, record labels as well as iPhone and iTunes music download systems. Therefore, Spotify should also adopt innovative and digital procedures in order to promote its success in the streaming music industry. Finally, music policy makers should provide legal procedures and policies that will reduce Apple domination in the streaming music industry.