Spotify, Rhapsody, Pandora: Business Model Analysis

2498 Words Apr 1st, 2013 10 Pages
Spotify, Pandora, and Rhapsody: Business Model Analysis

The Music Industry’s everlasting challenges have most recently undertaken targeted the digital consumption of music. As technology increases accessibility with media, specifically music, companies such as Spotify, Rhapsody, and Pandora have all taken a leap toward the online-streaming subscription route. Unfortunately, due to the lack of support from Artist’s and their management in the past, piracy of digital music, and matching royalty rates with their limited revenue streams, these companies face the difficulty of becoming the go-to access for music consumption.
When digital music first came out, listeners had the option of discarding of their tangible forms of music. Like any
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After losing the 42 million, Daniel Ek and company received 100 million dollars in investments the following year to aid in the launch in the United States. Spotify’s obstacle lies within keeping revenue rates above licensing fee rates. The offering of a free streaming service (as well as a paid service) caters to the crowd of listeners who continue pirate music or search for free services. By attracting these users, Spotify gains a relationship with each user by presenting the opportunity to personalize their music consumption. Most recently, Spotify’s partnering with Facebook has allowed users of both to create and share playlist’s and view real-time news feed of what their friends listen to.
As stated in an article in The Economist, Users continue to download digital music illegally because it is free and because they can. Spotify’s business model follows that carefree mindset of the user by producing an attractive, easy-to-use music catalog interface that is organized with social media as well as compatible with app-friendly devices. One example of distribution that favors the preference of the listener, as described in a recent story on USNews.com, is Pretty Lights. Pretty Lights a successful American touring electronic Artist/DJ and he recently became one the most downloaded Artist’s on thepiratebay.org (a website for illegally downloading digital music files). After learning this, Pretty Lights and his management

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