Business model canvas spotify

Business model canvas spotify

Spotify innovation

By presenting listeners with the opportunity to access their tier for free and supported by advertisements, it migrates listeners away from pirated and less monetized platforms and allows artists to generate better royalties than they used to.
The time to act for Spotify is right now. To address this problem, they have devised a marketing plan that will reinforce Spotify’s position of supporting artists and incentivizing users to pay for a premium subscription.
If Spotify customers would like to listen to more than what is offered for free, then they have to pay a monthly subscription to one of the many plans Spotify offers. They have very little control over how much Spotify actually charges for their subscriptions.
8tracks – consists of user-created playlists, which are tagged with descriptions. They also have a free version with ads and a premium version without ads.

Spotify agile model

This case study about the streaming platform explains how different elements of the business can vary online. We also highlight the success factors for developing a marketing strategy.
Spotify operates on a freemium model with most streaming users. Users who are subscribed for free have ads between songs, typically every 5 or 6 songs or in total 3 minutes of ads for every hour of song listening.
Seeing that many users were opting for the unlimited free option, Spotify changed this in April 2011, when they announced that the service would be limited to 10 hours per month after the first 6 months of use. This restriction disappeared in 2014.
Similarly, the launch of Spotify in the United States under the Beta version incentivized creating that «buzz» to promote access through social networks and word-of-mouth in this case as well.
This is an example that by having a similar activity to your competitors, both in the music industry and elsewhere, you can stand out from the rest and convince your audience by differentiating yourself in ways that others have not taken into account.

Spotify’s competitive advantages

The race to this point has been the race to get almost a hundred million users paying for its service, in addition to more than a hundred million others who use the platform in the free version (which only accounts for 10% of the revenue generated by paying users).
In June 2015 came perhaps the biggest competitor, surely the biggest threat: Apple Music. Surely no one would think that this arrival endangered the life of Spotify, but perhaps no one would think that there would not be a certain transfer of users whose effect on the accounts was an unknown.
One of the «tricks» is that it has managed to cut its operating expenses by 17% to 305 million dollars. It has also increased its cash flow, something which, although it has not been disclosed in detail, can be understood as having achieved a higher average revenue per user. This mainly involves getting more users to pay for their individual account instead of sharing it or using the family plan, or making those who took advantage of promotions such as three months for one euro end up paying the full price.

Spotify pest analysis

Spotify proposes a business model that consists of charging labels and artists for a new type of advertising in the app. Releases would be advertised within the platform, arguing that this would reach new fans.
The company found in podcasts and the bilateral market (which consists of the connection between users and labels through its service) the key to boost this system: the idea is to sell ads and new ways of broadcasting to record labels to generate more and better income.
The business, which used to consist of paying a store to put physical records in the first spaces of the store, has now moved, thanks to Spotify’s growth, to a competition within the digital ecosystem.

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