Essay on Spotify Case Study

2260 Words Sep 21st, 2013 10 Pages
Critical Analysis: What is the Strategy of Spotify and how improve business Spotify model:

Executive Summary:
This case study about the Spotify business model allows a broader vision of what the digital music industry is. In a short time, many companies have developed and managed marked their territory in a highly competitive industry. The start-up Spotify has undergone a remarkable evolution in a financial point of view but also in terms of its popularity. Its various competitive benefits regarding the market leader and its respect for music labels have enabled the company to be renowned and to have a reputation in the real business. Today, five years after its creation, Spotify is certainly criticized in some aspects of
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Indeed, according to Kathy Finn, (Reuter’s website, 2012), Pandora which has been created in 2000 in California, is the leader in the market with more than 125 million of users and no less than $274 million of revenue in 2012. With that kind of figures and new revenue estimation for 2013, (around $410 million), the question is how a strong competitor as Spotify can stand out from others companies, in such industry? What are their competitive advantages?
II. Spotify Business Model:
1. The Freemium model
"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently ”[…] “ then offer premium priced value added services or an enhanced version of your service to your customer base.” Fred Wilson, (2006).
Freemium is a word which appeared for the first time on the Fred Wilson’s Blog (www.AVC.com, 2006). The word is a contraction of "Free" and "Premium", which means offering premium subscription and enables at the same time another kind of users to listen to streaming music for free. According to the Co-Founder of the Hub Copenhagen Peter Froberg (2012), the Freemium business model is based on the wide expansion of a free offer to reach a large customers database and subsequently generate incomes by selling a Premium offer to a number of specific users. Contrary to the original meaning of

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