A Comprehensive Report on Spotify's Innovation and Development

This report provides a comprehensive analysis of Spotify's innovation strategies and historical development. It begins with an introduction to innovation and its importance for companies, followed by a case study of Spotify. The main body of the report delves into the effectiveness of various innovation theories, including the diffusion of innovation and the concern-based adoption model, discussing their advantages and limitations. The report then explores the application of these theories in Spotify's historical development, examining the company's business model, key partners, value propositions, and revenue streams. The report highlights how Spotify uses broadcasting, streaming, and a freemium model, generating revenue from subscriptions and advertisements. The report also discusses the historical context of Spotify's founding and its evolution as a platform for both music listeners and artists. Overall, the report emphasizes the importance of innovation for competitive advantage and provides insights into how Spotify has leveraged innovation theories to achieve its success in the music streaming market.

Report
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Effectiveness of innovation theories............................................................................................3
Application of innovation theory in historical development.......................................................7
APPLICATION OF THEORY......................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
Innovation is creating a knew value or presenting the product with the additional features is
known as innovation. innovation and invention Totally different from each other. invention is
anything that is developed for the first time and new for the people while innovation is edition of
the value our improvement in the existing product which shows what are different from each
other. it is necessary for the companies to come up with the innovation or development so they
can take competitive advantages.
This report will cover the case study of Spotify Which is an Swedish audio streaming and media
service provider. The application of this party wife was launched in year 2008 and this platform
is owned by the Spotify AB. This platform Offers the various facilities like digital Copyright
restricted recorded music and broadcasting on it. This platform includes more than 60 millions of
songs from the labels and media companies.
This report will Discuss about Theories of the innovation including their benefits and limitations.
It will Provide the brief discussion of the company and discuss about And historical
development of the Spotify company including the product and services provided by them how
this chosen theory can be helpful for the development of the company.
MAIN BODY
Effectiveness of innovation theories
Innovation is emerging as new tactic or way of growth and expansion for companies. It has
to provide platform to develop new product and service. Besides that, there are various types of
innovation theories which can be applied by companies in doing innovation. The use of theory
help in providing framework for innovation. Similarly, Spotify also applied theory of innovation
in product development (Serdyukov, 2017). In regards to Spotify it can be said that it is
Swedish audio streaming and media service provider. It is mainly available in most of Europe,
Americas, Oceania and on other modern devices. But there are several music apps that are also
providing unique features of music and other services to customers that are increasing
competition for companies including Spotify. For being in the competition, it is important for
this company to make features unique and innovate it. For better innovation, it can make use of
effective innovation strategies such as: (Kahn,., 2018)
Diffusion of innovation: It is one of the oldest and effective innovation theory that explains that
how and when something like products and an idea gains popularity/momentum and when it
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diffuses via a social system. So, it is found from research and analyzing that people adopt new
ideas and behaviors and these changes happen with time. Changes in ideas and behaviors put
pressure on companies to make changes in their products and services. But this strategy makes
companies able to use and make products innovative in a manner that can be diffused in easier
manner whenever company wants to change according to needs of it (Diffusion of Innovation
Theory, 2019). Some strategies under this innovation theory can be used for appealing people to
adapt such as:
Innovators: It refers people that are more likely to try innovation and interested in new ideas.
These people also do not hesitate in adapting and making changes and do not have fear of losing
and hence, develop new ideas.
Early adopters: These people represent opinion leaders and embrace changes opportunities
because they know the reason and effectiveness of making changes. They are comfortable in
adapting change (Scott and McGuire, 2017). So, by identifying such people, company can make
its innovation successful as they do not require convincing them much.
Early majority: These people are rarely leaders but can adopt innovation before the average
person. They want some prove and evidence that can make them sure that made changes and
innovations are effective and can satisfy their needs. So, it is important for company to provide
information to such people and convince them about adapting changes and making use of
products.
Late majority: These are people who only adopt changes when they listen about success of
changes and innovation and when many people use them in an effective manner. So, for
appealing such people, company requires providing success story and reviews of existing
customers as proof (Syahadiyanti and Subriadi, 2018).
Laggards: These people are very conservative and are less likely to adapt changes because of
fear of failure and dissatisfaction. There are some strategies that can be used by company for
appealing such group of people such as: statistics of success, fear appeals etc.
Advantages
 One of the main advantage of using this theory of innovation is scope or the degree to
which company can see innovation in better way than idea and product itself.
 It is consistent with values, experiences and needs of potential adopters.
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 After identifying types of people, it can make use of this strategy by focusing on early
adapters (Oyelana, Kamanzi and Richter, 2020).
Limitations
 There is lack of evidence of this theory especially in adopter categories.
 It becomes difficult in finding different categories of people as adapters.
 It can work better with adoption of behaviors rather than prevention of behaviors.
 Company finds problems in taking individuals resources into consideration to adapt the
new behavior.
Overall it can be said that this theory is successful and used in many fields. This is because many
firms has applied this theory in product development. Also with it they are able to adopt
innovation easily. For example, Apple used this to develop iPhone, iPad iPod, etc that is highly
successful and people adopted it easily.
Concern based adoption model: It is other main effective theory of innovation that can be used
by companies including Spotify for addressing change implementation on a system level. There
are several things that can be understood by supervisor and change leader and all these things
include:
 Process of change.
 Ways as how individual respond to change.
 Ways of making sure that correct actions can be followed to make sure success of change
initiation.
All this information can help Spotify in making changes effectively while program evaluation
(Al Masarweh, 2019).
For making use of this model in an effective manner it is important to understand its three
components for better assessing and guiding process that are:
Innovation configuration: Innovation configuration map plays a vital role as it provides a clear
picture of elements that constitutes high quality implementation. It acts as like exemplar for
guiding staff efforts for making products and services innovative.
Stages of concerns: This process of stages of concerns includes interviews, questionnaires as
well as opens ended statements. All these help leaders and make them able in identifying
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attitudes and behavior of staff members towards new program and changes that company wants
to make in their services and products. By knowing their attitudes, leader can take actions and if
employees resist changes and innovation in new products then they can make them aware about
importance of making changes (Concerns Based Adoption Model, 2018).
Levels of use: Level of use interviews tools help leaders in knowing that how their staff
members are making use of program in both collectively and individually. It may be ranged from
nonuse to advanced use. This information and actions taken by leaders can make staff members
able in using program and making changes effectively.
Advantages
 This theory of innovation can help leader of Spotify in knowing problems that staff
members have with innovation and new change.
 By knowing problems they can change accordingly and can take action and lead changes
successfully.
 It can help them out in shifting one’s attitudes and beliefs.
It is also important for leaders to make staff members comfortable with changes as it can
help company in implement innovation and changes in an effective manner.
Limitations
 Staff faces problems initially in moving beyond their personal concerns and they will also
require come out from comfort zone (Nnaji and Karakhan, 2020).
 Adapting change as well as changing ways of performance can be sometimes frustrated.
Thus, it is stated that there are several types of innovation theories which is available and each
one is having its own advantage and disadvantage. The theories can be applied by companies in
doing innovation. However, most common used theory is diffusion as it is highly successful as
innovation done has resulted in growth of firm rapidly. Besides that, company capabilities has
increased as they are able to see better than new idea. use of theory help in providing framework
for innovation.
Spotify can also develop the new theories that will help them to come up with the New ideas and
innovation within their business and they will able to take competitive advantages within the
market where they are operating their business. innovation is always helpful for the company to
take competitive advantages and provide a better position within the market. Spotify is the
platform where millions and millions of people come to listen the songs and they can create
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innovative additional features that can allow the users to easily search the songs and use this
application effectively. The Theories can be useful for the Spotify company to come up with the
new design, better features and better development in the application. it will attract many more
people and decrease the competition force from the company. To take the competitive
advantages it is necessary for the company to have a innovative design of their application and
additional features that can be helpful for company to take competitive advantages. there are
several music apps that are also providing unique features of music and other services to
customers that are increasing competition for companies including Spotify. For being in the
competition, it is important for this company to make features unique and innovate it. For better
innovation, it can make use of effective innovation strategies and theories.
Application of innovation theory in historical development
Swedish audio streaming and media service provider. The application of this party wife
was launched in year 2008 and this platform is owned by the Spotify AB. This platform Offers
the various facilities like digital Copyright restricted recorded music and broadcasting on it. This
platform includes more than 60 millions of songs from the labels and media companies (Kahn.,
2018). The models used by the Spotify are broadcasting, streaming, Liebling. The Spotify also
run on the Freemium Model, makes money from the subscriptions and advertisements. This
company create or make their revenue around 91% from the subscription an 9% from the
advertisement and this company also provide music deals, licencing and pay to the artist.
Business canvas model of Spotify
Business Model Canvas
Key Partners
Rights holder like artist,
lab
Key
Activ
ities
Value
Propositi
ons
Customer
Relationships
Customer
Segments
open source development,
Collaborators and
advertisers.
Soft
ware
devel
opme
Music
Ecosyste
m, user
generate
community
of users,
Andre in
relations and
all type
of
customers
hold like
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nt
and
maint
enan
ce,
conn
ectin
g
fans
to the
musi
c and
data
mini
ng
analy
sis.
d
content,
unlimite
d music,
sharing,
collabora
tion and
suggesti
ons
peer to peer to listen
music.
Key
Reso
urces
Channels
Users
data
Whic
h is
valua
ble
for
the
Internet,
application of
this Spotify
that is
available on
mobile,
desktop etc.
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comp
any
to
gener
ate
profit
s,
peopl
e
with
the
huge
talent
an
musi
c
relate
d
conte
nt.
Cost Structure Revenue Streams
Royalty free music that people
get without Copyright,
investment and personal costs.
Companies generate
revenue from the
advertisement Anne
subscription packs
from the Spotify.
Historical development
Spotify is the application or the platform that is used by millions of artists Anne at half
millions of users who used this application or platform 2 listen music and artist use this to show
their talent. this company was founded by the Martin and Danielle and it was actually started as a
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small startup in Stockholm, Sweden. in the beginning of business spotty was offering the free
services with the advertising to the fans of music an artist, in hopes they would upgrade to the 10
pound a month ad free subscriptions. Any year 2009 this company open the public registration
for the free services within the United Kingdom, in 2011 offered a six month (Von Hippel.,
2016). It was on the trial where the new users could listen and unlimited music without .
paying money. Any year 2019 the free trial period began to expire unlimited users 210 hours of
streaming each month and five pings person. in 2016 the company launches the largest campaign
. currently this company is one of the best platform for this streaming, label music, free music
providers. millions of users are using this platform and satisfying their needs.
Application of Theory
Spotify can also use the diffusion theory to promote their application in the rural and
urban areas, they can focus on the marketing by providing the low cost subscription packs to the
customers that can be affordable in the what rural and urban areas of the country, it will help
them too get the more subscription of the pack which will help them too get more users and this
company will take competitive advantages within the market where their operating their business
(Lyytinen, Majchrzak and Song., 2017). Students within the rural areas can also be a good target
for the Spotify, they can organize the events within the educational institution that will help
them to get more users for them.
Another application that can be used by this Spotify leaders is innovation configuration, they can
use the interviews where they will get the clear picture about what behaviour team members
have about the company and what are new ideas. This will provide a new ideas and create a good
attitude in staff members and they will come up with new ideas.
APPLICATION OF THEORY
It is necessary for Spotify to develop effective and innovative strategies for future. This is
because it will enable them to compete with rivals and sustain in industry for long term.
However, through innovation only company will be able to compete in market. They will be able
to attract more customers and retain them. Innovation is base or foundation through which
technological firms are able to develop new products and services. They find out people needs
and accordingly include features in it. use of theory help in providing framework for innovation
(Nambisan,., Lyytinen, . and Song, 2017).
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Similarly, it has been analysed that Spotify has also developed some future plans by which
they will grow and expand in market. Here, from website of company it is found that they are
preparing to launch subscription podcast service that will offer access to shows and episodes by
paying monthly fee. Thus, it will be similar service which is being offered by Netflix and
Amazon to their customers. Thus, customers will be able to use Spotify App to watch TV shows
and programs. However, monthly plan fee charged by Spotify will be lowest that is from $3 to
$8. Alongside, cheapest plan will have access to episode but it will include ads and in expensive
plan no ads will be included and customer will have access to shows early as compared to others.
Moreover, it is evaluated that this plan will be different from music subscription.
Apart from that, future plan also includes improving user experience. Here, Spotify will
remove unnecessary things from App and including only those which can be accessed by
customers and is important to them. So, for that they will use AI and offer new services as well.
The company is also expanding subscriptions at global level. For example- they have selected 5
markets that are Chile, Denmark, Australia, Ireland and Netherlands where they will expand
subscription plan. Thus, they are focusing in market expansion in future with new type of service
being provided to people. Moreover, they will try to attract more investors so that more funds are
acquired from them and it makes easy to provide high quality services to people. This will help
in improving financial performance and market share of firm as well. (Serdyukov, 2017).
Apart from it, in future Spotify has decided to invest a lot of amount in podcasting services.
For that, they will acquire podcast companies such as Gimlet, Parcast, Ringer, etc. Therefore, it
will enable in offering and providing high quality podcast services to people.
But entering in podcast will result in rise in competition so Spotify is ready to compete with
rivals in market. Thus, it will be great innovative idea to integrate both music and podcasting
services in single App. The organisation focuses on shaping podcast industry by launching
premium subscription plan and competing with rivals Amazon, Apple, Google, etc. They have
developed a 5 year strategy and form goals and objectives as well.
Hence, in future as well Spotify can apply diffusion theory of innovation in which with change
people will be able to adopt innovation. This will make it easy for firm to develop strategies for
future and on basis of that implementing innovation. The podcast services will be adopted by
people with change in time and innovation is quickly implemented within organization.
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Henceforth, short term goal are developed for future by Spotify so that they grow gradually in
market with innovation in service (Nambisan, ., Lyytinen, . and Song,., 2017).
CONCLUSION
From above report it can be concluded that use of theory help in providing framework for
innovation. Spotify is audio streaming App and media service provider. It allows people to listen
to music for free or by taking subscription. The company have effectively applied innovation
theory of diffusion in which they developed an innovative idea of music app hat give user value
to listen to music for free. The advantage of using theory is that is scope or the degree to which
company can see innovation in better way than idea and product itself and consistent with values,
experiences and needs of potential adopters. But disadvantage is that lack of evidence of theory
in adopter categories and difficult in finding different categories of people as adapters. The
innovation configuration map shows picture for high quality implementation. in the end of this
report has been provided innovation theories for the future development of the Spotify so they
can take competitive advantages within the market where they are operating their business.
Spotify future plan is to enter in podcast service with various monthly premium plans. It will be
within range of $3 to $8. The cheapest plan will have access to episode but it will include ads
and in expensive plan no ads will be there.
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