Essay on Overview of Spotify

2339 Words 10 Pages
Spotify is one of the biggest players in music streaming industry. Since its public launch in 2008, Spotify has grown significantly having more than 6 million subscribers of its 24 million active users in 32 countries on 4 continents, as of October 2013. [1]

Business model
Spotify is on-demand streaming music player. After registration and downloading the desktop application user gains access to more than 20 million songs that are currently available on Spotify [1]. The main characteristic of Spotify’s streaming service is that it does not sell music, but it gives access to it. Streaming digital music is based on agreements with content owners - record labels, digital distributors, aggregators and publisher collecting
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­ Free account users are subjected to visual and radio-style advertising that interrupts streaming every few songs. [4]
• Spotify Unlimited
­ For subscription fee of £4.99 a month both advertisements and the time limit are removed [5].
• Spotify Premium
­ In addition to unlimited ad-free streaming, users paying £9.99 a month get access to Spotify not only on their computers but also on other devices – iPods, smartphones, tablets, home entertainment systems and more [5].
­ Moreover, premium users can enter offline mode so they can listen to their playlists even without internet connection [6].
­ Presently, Spotify offers 30-day premium trial which gives people the opportunity to test the premium services so they can decide whether to subscribe or not [7].
The idea of Spotify’s business model is to win as many new users as possible, lock them in and finally convert them. By giving away its core services for free in combination with partnership with Facebook, Spotify managed to significantly grow its users’ base. Deep integration with Facebook was very beneficial because it allowed Spotify to go viral, which heavily contributed to grow Spotify’s users’ base. However, the main challenge for Spotify’s freemium model lies in turning these free users into paying ones. Spotify does that mainly through increasing value proposition, which will be described in detail further. [8]

Customer Value Propositions
Customers of Spotify are divided into two groups –

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