Overview of Spotify Essay

Overview of Spotify Essay

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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 societies, to whom Spotify pays out royalties [2]. Without these agreements there would be no music to stream. Basically, Spotify has an intermediary role as it distributes music content from right holders to listeners.
Spotify is operating on “mixed advertising/freemium business model”. The freemium business model is based on idea that the company offers simple and basic services for free for the user to try and more advanced or additional features at a premium [3]. One important role in Spotify’s business model is having advertisers who generate revenue that is used to finance costs of free subscription. In other words, without ads, there would be no free music.

Spotify’s users are presented with several options of subscription, which differ from country to country. Right now, users in UK can choose from these three options:
• Spotify Free
­ This option is completely free and after creating an account, users are enabled to listen to music on their computers as much as they want during initial 6 month...

... middle of paper ...

.../www.androidpit.com/itunes-radio-spotify-google-music-service [Accessed at 3 December 2013].
[23] Kniberg, H. and Ivarsson, A. (2012), Scaling Agile @ Spotify with Tribes, Squads, Chapters & Guilds [online]. Available at: https://dl.dropboxusercontent.com/u/1018963/Articles/SpotifyScaling.pdf [Accessed at 3 December 2013].
[24] Titlow, J. P. (2013). 6 Million People Pay For Spotify - Is That Good Enough? [online]. Readwrite. Available at: http://readwrite.com/2013/03/13/spotify-six-million-paid-subscribers-growth-quick-enough#awesm=~ooGnd8WPWQ88er [Accessed at 3 December 2013].
[25] Newton, Casey (2013), Last man streaming: Spotify's $250 million war chest makes it the music company to beat [online]. The Verge. Available at: http://www.theverge.com/2013/11/22/5134598/last-man-streaming-spotifys-250-war-chest-makes-it-the-music-company [Accessed at 3 December 2013].

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