Spotify Strategy

4831 Words Sep 24th, 2014 20 Pages
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
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Their service is offered to users as an alternative to the traditional pay-per-track services such as iTunes. The idea is to allow music consumers to listen to on-demand music from a “cloud” on the internet, instead of possessing the digitalized files on a computer.

Spotify is available in 28 countries and currently has over 24 million users, of which over 6 million are paying subscribers. Spotify offers threes different subscriptions: Spotify Free, Spotify Unlimited, and Spotify Premium.

Spotify has signed an agreement with all the four major record labels. The company has received financial backing from the likes of Northzone, Kleiner Perkins Caufield & Byers, Accel Partners and DST.

1.2 Mission, vision and values
Spotify’s mission is to connect millions of people with their favorite songs and create a service that people love to use. They believe that music should be easily accessible for everyone, as listening to music may enrich peoples lives. They want to make a win-win solution for both the people who are creating the music and the people who wish to listen to the music.

Their vision is thus to provide music for every moment. To become the number one operating system for the music of the future, and to attract more users to their premium services in order to generate more profit.

2. Strategic Problem Analysis

According to reuters.com, Spotify earned a massive 435 million euros in 2012 when it expanded to new markets.…

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