Application of Blue Ocean Strategy to Spotify's Future Development

This report provides a comprehensive analysis of Spotify's application of the Blue Ocean Strategy. It begins with an introduction to the concept of innovation and its importance, followed by an overview of Spotify's historical development, including its launch in 2008 and subsequent growth. The report examines how Spotify has applied the Blue Ocean Strategy to create new markets and avoid direct competition, particularly in the context of its vision and mission. It includes a detailed business canvas model that highlights key partners, activities, resources, and revenue streams. The report then focuses on Spotify's strategic moves, such as its expansion into podcast services and audiobooks, and analyzes how these initiatives align with the Blue Ocean Strategy innovation theory, which emphasizes the creation of new markets with minimal competition. The conclusion underscores the importance of innovation for long-term market performance and emphasizes how the Blue Ocean Strategy helps organizations identify and develop growing markets to achieve success and increase profitability.

Blue Ocean Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
Application of Blue ocean strategy in context to the historical development.............................3
Historical development of Spotify..............................................................................................6
Application of Blue Ocean Strategy Innovation Theory in future development context. .........7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Innovation is defined as developing of new idea which can substitute the existing product
with high value and efficiency that satisfy customers and meet with the market demand. In
addition to this, innovation management is the systematic process which involve promotion of
new idea within the internal as well as external environment (Vieira and Ferreira, 2018). For the
present report, Spotify is taken into consideration. It is a Swedish media service and audio
streaming provider that was established in year 2008 and head office in Stockholm, Sweden. The
report will over Historical development of respective organisation along with business canvas
model. In addition to this, application of blue ocean strategy in context to future development of
company is elaborated in the report.
Application of Blue ocean strategy in context to the historical development
COMPANY OVERVIEW:
Spotify is a Swedish brand that operates and offering a transformed platform for the
music lovers by changing the concept of music listening entirely in the year 2008. The
organisation launched an application for people where they can manage, discover as well as
share around 50 million audio and tracks for free. In addition to this, its application has premium
membership for the people who want to listen music without any interruption and other
associated benefits of membership. The respective organisation is a leading brand in audio
streaming field & service provider in the present. Moreover, the company has more than 289
million subscribers and in this around 40% of subscribers belong from different markets
globally.
VISION:
The vision of Spotify is based on its objectives, which stated that the organisation is
aiming to give a common platform to all people and culture of societies for declining the borders
& making them experience all form of music & empathize with the another one.
MISSION:
The mission of Spotify is related with transforming the aims and objectives determined
into reality and direct the company towards attainment of all the goals with taking up broader
notions and perspectives.
BUSINESS CANVAS MODEL:

Key Partners:
 Rights
holders
 Independe
nt artists
 third party
integration
 Record
Labels
 Service
provider
of internet
 acquisitio
n
 cloud
providers
Key Activities:
 Mobile
applicatio
n and
website
 Online
web
 Platform
developm
ent and
maintenan
ce
 Contract
negotiatio
ns
 Library
music
manageme
nt
 Services
roadmap
 Legal
contract
 Marketing
Value
Proposition:
 Easy
access at
any time
and place.
 free music
streaming
service
that is
without
advertise
ment
 personalis
ations
 Providing
more than
29 million
songs
 effective
advertise
ment and
platform
 Discover
weekly
playlist
Customer
Relationships:
 small
segmentati
on
 machine-
driven
 Improved
sound
quality up
to a
300kbps
bitrate
 streaming
on
demand
 online
 communit
y
 co-
creation
Customer
Segments:
 Music
lovers
 developers
 Premium
membersh
ip users
 advertisers
 students
Key Resources:
 1,500+
staff
members
 brand
 talent
Channels:
 spotify.co
m
 App store
 Google
Play

 big data
 playlists
 creation
 contracts
 organisati
on
environme
nt
 number if
users
 long tail
music
catalog
 website
 Desktop
applicatio
n
 IOS
 Android
 entertainm
ent
systems
 TV's
 Applicatio
n
accessible
for
Microsoft
Windows
 smart
watches
 digital
platforms
Cost Structure:
 Salaries and pay
 copyrights
 Royalties of number of artists
 offices
 Licensing fee
 Bandwidth
 Information Technology Operations
 Product Roadmap
Revenue Streams:
 Spotify operates with the premium
model which is basic services provided
to the users free, but involve additional
pay for the premium membership who
want to listen music without any
interruptions and gain other benefits.

 Judicial fee
Historical development of Spotify.
The Swedish streaming service Spotify was established in the year 2006 at Stockholm to
find an effective solution for problem of piracy faced by the music industry. The organisation
saw stable growth rate after launching their services on apple app store by offering new option
for music streaming which was based on subscription model . The company acquired investment
of $100 million for their American expansion and was available in android operating system by
2012 .The organisation gained 10 million subscribers in 2012 and bought Swedish start-up to
enhance their music discovery services and advertisement algorithm (Kim and Mauborgne,
2017). In the year 2014 the company launched their premium subscription services which
allowed users to use their services without commercials and family subscription for extension of
premium services to the family of consumer. The easily accessible and cheaper music services
offered by the organisation attracted many consumers and created a new market of music
steaming application services.
The organisation was able to identify the needs of consumers related to music streaming
and presented various consumers fresh options for affordable music streaming. The organisation
introduced new and innovative services to their consumers music video such as streaming
application with playlist building and sharing features and algorithms which placed
advertisements based on their consumers needs, this technique bought revenue in the form of
advertisement sales and helped the company gain advantage from their innovative and accessible
services. The organisation was able to attract music creators by introducing services which
allowed independent musicians to upload their songs in their business commodities (Wee,
2017). This not only helped the organisation increase versatility of their content but also created
market for affordable musical audio content from popular labels to independent small music
creators. To battle cases of plagiarism the organisation improved their services for detection of
plagiarised and low quality music material, this helped the organisation provide their users better
quality music.
Application of Blue Ocean Strategy Innovation Theory in future development context.
Blue ocean strategy innovation theory focus on continuous development of product
specialisation and offering unique quality products or services at low cost with the aim of

constructing and exploiting new markets. According to this theory industry based limitations and
market bounds can be rebuild by activities and commitment of individual organisation. This
strategy helps organisations build new markets which have negligible competition. In relation to
the future development of Spotify, the corporation is investing on expanding their audio services
beyond music towards various other audio based programs and content (Nag and Tran, 2020).
The current trend of the audio based markets is towards attracting consumers which are
interested in listening to non musical audio content such as audio books and other audio content.
Spotify identified this new trend early and invested on introducing podcast services in their
application which includes episodic series of audio content that can be downloaded or played by
installing the application on the consumer's device. These podcast services covered all
entertainment genres and other content such as news, interviews, audio debate programmes.
The podcast and audio books service is easily accessible to all the users of their
application from any location. This service not only allows users to stream various podcasts but
also upload their podcast content on the application and earn some amount in return. Various
users of premium subscription are able to listen to wide range of content without any
advertisement. The blue ocean theory strategy is utilised in this situation, as the introduction of
non-musical content allowed the organisation to venture into markets with negligible
competition and exploit vast potential of non musical streaming market.
These podcast service is helpful in attracting large number content creators from all
across the globe and helping the company diversify their content and make their content
inclusive of various cultures and different opinions (Denning, 2017). This service is also
providing the company large number of premium subscription consumer, as it increases diversity
of content from all various categories of fictional and non-fictional content and allows
consumers to listen to their podcast of choice from broad range of options without any disruption
from promotional breaks.
The blue ocean innovation theory is at play in this part of the service as it will bring new
audio content which does not have competition for consumers of all cultures, nationalities and
ages as well as enable them to stream various categories of content which is not limited to
particular language or style. The introduction of audio books at affordable price reflects
application of blue ocean innovation strategy as it will build new market for online streaming of
audio books narrated by suitable individuals and help the company exploit absence of

competition in that market. The application of this theory allows the organisation to construct
market without strong competition and expand the limitations of their industry (Barsch, Heupel
and Trautmann, 2019).
CONCLUSION
From the above study, it has been concluded that it is important for an organisation to
bring innovation at marketplace as it help in log term retention and in enhancement of market
performance. It is analysed that with the help of blue ocean strategy am organisation is able to
find & develop growing markets and decline red oceans that is saturated and overdeveloped
market. Along with this, it help an organisation to decline risk, gain success and raise profit
within the uncontested and growing market as well. Moreover, it help respective organisation
and opens the door for bringing innovation within the new market as a future development which
in turn raise profitability and productivity of an organisation.

REFERENCES
Books &Journal
Vieira, E.R.M. and Ferreira, J.J., 2018. Strategic framework of fitness clubs based on quality
dimensions: the blue ocean strategy approach. Total Quality Management & Business
Excellence, 29(13-14), pp.1648-1667.
Kim, W.C. and Mauborgne, R.A., 2017. Blue Ocean Leadership (Harvard Business Review
Classics). Harvard Business Review Press.
Wee, C.H., 2017. Think tank—beyond the five forces model and blue ocean strategy: an
integrative perspective from Sun Zi Bingfa. Global Business and Organizational
Excellence, 36(2), pp.34-45.
Nag, B. and Tran, J., 2020. Blue Ocean Strategy and Operations Management. American
Journal of Management, 20(2), pp.33-44.
Denning, S., 2017. Strategic agility: Using agile teams to explore opportunities for market-
creating innovation. Strategy & Leadership.
Barsch, T., Heupel, T. and Trautmann, H. eds., 2019. Die Blue-Ocean-Strategie in Theorie und
Praxis: Diskurs und 16 Beispiele erfolgreicher Anwendung. Springer-Verlag.
Upadrista, V., 2017. The Art of Consultative Selling in IT: Taking Blue Ocean Strategy a Step
Ahead. CRC Press.
Rainaldo, M., 2017. Menciptakan Nilai Melalui Inovasi Untuk Jasa Online Berbasis Lokasi
Menggunakan Blue Ocean Strategy (Doctoral dissertation, Institut Teknologi Sepuluh
Nopember).