Spotify: Analysis of Market Drivers and Competitive Strategies

This case study report analyzes Spotify, a leading music streaming application, focusing on its market competition and the strategies it employs. The report begins with an executive summary highlighting the competitive landscape and key findings. It then delves into internal and external analyses, evaluating Spotify's strengths, weaknesses, opportunities, and threats. The internal analysis examines Spotify's resources and capabilities, including its financial, human, and physical assets, and how these contribute to its competitive advantage. The external analysis explores the competitive environment, identifying key players like Apple Music and Amazon Music, and the factors influencing the music streaming industry. The report also discusses the drivers of industry development, such as increasing smartphone usage and internet connectivity. The conclusion summarizes the challenges Spotify faces and the need for strategic adjustments to maintain its market leadership. References to academic journals and online sources support the analysis.

Case Study Report

Executive Summary
This report is based on the Spotify music streaming app and it provide a brief
report on the market competition and companies which are working in this sector.
It is essential for the Spotify to over come on their market rivalry, internal and
external analysis will be done in this report and as well as driver of development
also explained in this file. Company is working with leading position with 43% of
market share in all companies because of their business model. They have
premium and free services tires which is able to sustain competitive advantage.

Table of Contents
INTRODUCTION...........................................................................................................................1
Internal analysis......................................................................................................................1
External Analysis....................................................................................................................3
Drivers of industry development............................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5
APPENDICES.................................................................................................................................7
Appendix 1.............................................................................................................................7
Appendix 2.............................................................................................................................7
Appendix 3.............................................................................................................................7
Appendix 4.............................................................................................................................8
Appendix 5.............................................................................................................................9

INTRODUCTION
Business environment is dynamic in nature, thus it is essential for each and every kind of
business to evaluate it internally as well as externally. It will assist them to develop policies
accordingly, therefore they can compete their competitors at marketplace. Spotify is a music
player application and launched in near 2008. People can easily download this app for them from
play store. They can download music freely for sometimes but after a limited time span they
have to take paid subscription (Klapper, Lewin and Delgado, 2011). There are various
competitors of them such as iTunes, Amazon music and so on. Spotify provide three type of
services to their customers, like free, premium as well as family. Premium and family users can
listen music offline also but free users cannot.
Internal analysis
Spotify is providing effective services to their clients, this will assist them to attract many
individuals towards them. If any person take premium administrations then they can download
unlimited music and along with this can listen adequate sound quality (See Appendix 1). It is
necessary for company to conduct internal analysis, as it will help manager to develop
appropriate strategies which are advantageous for them. Resources are like an assets for an
enterprise, as with assistance of this they can accomplish entire activities which are associated
with their mission, targets, vision etc.
There are many resources which are mentioned as beneath:
 Financial resources
 Human resources
 Physical assets
 Human assets
It is essential for manager to utilize all resources of enterprise in an effective and efficient
way, so that they can get best result. Several resources are linked with capabilities of an
organisation (Tamura and et. al., 2013). As it is more complex in nature, therefore, it is must for
employer to maintain coordination between process, as a result inputs can be easily transformed
into appropriate outputs.
If Spotify is doing their business in an effective as well as efficient way, then they can
take competitive advantages from their competitors (See Appendix 2). It is not must that a single
1

technique always aid them to lead in market, as conditions of marketplace is dynamic. It can be
changed as per the time. Hence, it is must for firm to make policies flexible, so that they can
modify it as per needs. Along with this, if ability of Spotify is different, then it will help them to
beat their rivals. It will permit them to create some sustainable competitive benefits, as a result
they can perform well at market. There are some characteristics which cited company have,
which are described as below:
 They provide best and effective services to their clients they consider them as a superior.
 Spotify do their business in distinctive ways, which help them to beat their competitors
at marketplace.
Core competencies make company distinctive from other at market. There intrinsic sharing
procedure make them different from others. There are some relationship amongst abilities of
organisation, different organisational capacities and along with this core competencies, are
mentioned as beneath:
 Capabilities which are related with organisation assists manager to formulate core
competencies. As each and every firm has their process as well as routine to accomplish
their work (Dinnie, 2015).
 Foremost value, skills as well as abilities are developed with help of organisational
capabilities.
 If core competencies for enterprise is setted then they can easily improve their
capabilities, it will help them in their growth as well as development.
For survival of an enterprise, it is essential for them to compete their competitors at marketplace.
If they do that, then it will aid Spotify in their long term success as well as growth. Fundamental
aim for doing intrinsic examination is, to evaluate what firm has or not and along with this, what
they can do for their betterment or not. In short, it is all about to identify strength and along with
this weakness of cited association.
The major strength of cited organisation is that they are providing best quality of music to
their users and along with this people can easily download music form their app and listen it
offline also. Subscription of application cost is not much high as compare to their competitors.
Spotify is well known brand in country, thus they will take advantages from their rivals easily.
Whenever they update their app, they add extremely best features into it with an innovative way.
2

Instead of all their strength they have some weaknesses, like cost structure of association
is not much effective and along with this acquisition is not much good (Wei and et. al., 2012).
Thus, it is essential for them to overcome from their shortcomings, so that they can take
sustainable competitive benefits (See Appendix 3).
External Analysis
Spotify is a leading music app and they are working in the digital market of music, it is
an industry which is having a huge market rivalries (Refer to appendix 5). Many companies are
working in this segment and they are giving a tough competition to Spotify. Apple music is one
of the biggest competitor of Spotify, it is having more than 106 million users world wide and
these are paid users (Vining, 2011). Total collection of the Apple music in the year of 2016 was
$7.69 Billion which shows their market grip (Refer to appendix 5). I-tunes store is another
application which especially made for Mac and Window based computers, it has more than
200,000 songs in the store and a person can download or stream these snogs by paying 99 cent
for each songs (The 2017 Mobile App Market: Statistics, Trends, and Analysis. 2017). Sony is
also working in the music production and they have launched their Sony Music Store in the year
of 2004 and they have also used the policies of I tunes to provide services, they are using the
same pricing as per I tunes (Oh and et. al., 2012). Microsoft also start their app in the year of
2006 named as Zune market place but it does not get the desired success in the market so they
have refurbished this and relaunch as X-Box music in the year of 2012 which has get a little
success. But due to Microsoft failed in mobile industry so they have closed these apps also
(Dinnie, 2015). Google Play Music, Amozon Prime Music and Internet Radio is also working in
the same sector which are contributing in the market share and reducing the profitability of the
Spotify.
So it is essential for the Spotify to work on their competitive advantage which can help to
them to over come on their market competitors, most of the organisation are providing paid
services but Spotify has to use their smart work and they have to provide free services
occasionally.
Drivers of industry development
Music streaming industry has regular development and behind of this some drivers are
working effectively which are explained here;
3

Easy to store: Music can store in super computers by the company so it attracts more
companies in this sector to work in this sector (Wu, Ding and Chen, 2012). So it enhance the
development of industry and attracts more organisations like Apple and Sony to work in it.
Increase use of smart Phones: Music streaming has increased by smart Phones because
all of these music apps has installed in smart phones where a customer can easily access it.
Samsung, Apple are the leading companies which has a large market of customers. So these
companies work as a driver in the development of this industry because a smart phone user can
easily use these application.
Customer's interest: Consumers needs change in their stored music so this factor works
as a driver of this industry development (Rahm and et. al., 2013). In the starting Spotify was
working in this sector but after the success of this app many companies launch their online music
store. So this works as a development factor which enhance the options to consumers to listen
best quality music in fair prices.
Internet connectivity: Internet is a major factor behind the development of this industry
because most of the companies which are working in the telecommuni9cation are focusing on the
high data transferring. So this helps in the development because high speed internet supports
these types of apps to access music from online music stores. So this factors work to provide a
better connection in between users and services providers which supports to enhance number of
paid service users in music streaming.
Easy to access by subscribers: I phone and smart phone users are easily access these
types of apps which supports to the companies which are working in this sector to increase their
services (Lane and Johnstone, 2012). Increased smart phone users works as a cause behind the
development of the industry because people are accessing and streaming music rather to
download and store in the phone.
So these are some drivers which worked as a development cause in music streaming
industry and finally which supports to music listeners.
CONCLUSION
As per the above explained report it can be concluded that Spotify has tough market
competition and they are having a huge need to develop some changes which can be it's
competitive advantage. Apple is working as a biggest challenger for them so it is essential for
them to over come on it which can help to them to become market leaders.
4

REFERENCES
Books and Journals:
Dinnie, K., 2015. Nation branding: Concepts, issues, practice. Routledge.
(https://scholar.google.co.uk/scholar?q=Dinnie%2C+K.%2C+2015.+Nation+branding
%3A+Concepts%2C+issues%2C+practice.+Routledge.&btnG=&hl=en&as_sdt=0%2C5)
Klapper, L., Lewin, A. and Delgado, J. M. Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development. pp. 108-123.
Palgrave Macmillan UK.
(https://scholar.google.co.uk/scholar?q=Klapper%2C+L.%2C+Lewin%2C+A.+and+Delgado
%2C+J.+M.+Q.
%2C+2011.+The+impact+of+the+business+environment+on+the+business+creation+process.
+In+Entrepreneurship+and+Economic+Development.+pp.+108-
123.+Palgrave+Macmillan+UK.&btnG=&hl=en&as_sdt=0%2C5)
Lane, J. E. and Johnstone, D. B. eds., 2012. Universities and colleges as economic drivers:
Measuring higher education’s role in economic development. SUNY Press.
(https://scholar.google.co.uk/scholar?q=Lane%2C+J.+E.+and+Johnstone%2C+D.+B.+eds.
%2C+2012.+Universities+and+colleges+as+economic+drivers
%3A+Measuring+higher+education%E2%80%99s+role+in+economic+development.
+SUNY+Press.&btnG=&hl=en&as_sdt=0%2C5)
Oh, T. and et. al., 2012. External analysis-based fuzzy PLS model for prediction and monitoring
in MBR. Desalination and Water Treatment. 43(1-3). pp.185-192.
(https://scholar.google.co.uk/scholar?q=Oh%2C+T.+and+et.+al.%2C+2012.+External+analysis-
based+fuzzy+PLS+model+for+prediction+and+monitoring+in+MBR.
+Desalination+and+Water+Treatment.+43%281-3%29.+pp.185-
192.&btnG=&hl=en&as_sdt=0%2C5)
Rahm, B. G. and et. al., 2013. Wastewater management and Marcellus Shale gas development:
Trends, drivers, and planning implications. Journal of environmental management. 120. pp.105-
113.
(https://scholar.google.co.uk/scholar?q=Rahm%2C+B.+G.+and+et.+al.
%2C+2013.+Wastewater+management+and+Marcellus+Shale+gas+development%3A+Trends
%2C+drivers%2C+and+planning+implications.+Journal+of+environmental+management.
+120.+pp.105-113.&btnG=&hl=en&as_sdt=0%2C5)
Tamura, K. and et. al., 2013. MEGA6: molecular evolutionary genetics analysis version 6.0.
Molecular biology and evolution. 30(12). pp.2725-2729.
(https://scholar.google.co.uk/scholar?q=Tamura%2C+K.+and+et.+al.
%2C+2013.+MEGA6%3A+molecular+evolutionary+genetics+analysis+version+6.0.+Molecular
+biology+and+evolution.+30%2812%29.+pp.2725-2729.&btnG=&hl=en&as_sdt=0%2C5)
Vining, A. R., 2011. Public agency external analysis using a modified “five forces” framework.
International Public Management Journal. 14(1). pp.63-105.
(https://scholar.google.co.uk/scholar?q=Vining%2C+A.+R.
%2C+2011.+Public+agency+external+analysis+using+a+modified+%E2%80%9Cfive+forces
%E2%80%9D+framework.+International+Public+Management+Journal.+14%281%29.+pp.63-
105.&btnG=&hl=en&as_sdt=0%2C5)
5

Wei, D. H. and et. al., 2012. External fixation versus internal fixation for unstable distal radius
fractures: a systematic review and meta-analysis of comparative clinical trials. Journal of
orthopaedic trauma. 26(7). pp.386-394.
(https://scholar.google.co.uk/scholar?q=Wei%2C+D.+H.+and+et.+al.
%2C+2012.+External+fixation+versus+internal+fixation+for+unstable+distal+radius+fractures
%3A+a+systematic+review+and+meta-analysis+of+comparative+clinical+trials.
+Journal+of+orthopaedic+trauma.+26%287%29.+pp.386-394.&btnG=&hl=en&as_sdt=0%2C5)
Wu, G. C., Ding, J. H. and Chen, P. S., 2012. The effects of GSCM drivers and institutional
pressures on GSCM practices in Taiwan’s textile and apparel industry. International Journal of
Production Economics. 135(2). pp.618-636.
(https://scholar.google.co.uk/scholar?q=Wu,+G.+C.,+Ding,+J.+H.+and+Chen,+P.+S.,
+2012.+The+effects+of+GSCM+drivers+and+institutional+pressures+on+GSCM+practices+in+
Taiwan%E2%80%99s+textile+and+apparel+industry.
+International+Journal+of+Production+Economics.+135(2).+pp.618-636.&hl=en&as_sdt=0,5)
Online:
Internal analysis. 2017. [Online]. Available through: <http://trinitywebworks.com/blog/internal-
analysis-your-competitive-advantage.html>. [Accessed on 7th September 2017].
The 2017 Mobile App Market: Statistics, Trends, and Analysis. 2017. [Online]. Available
through: <http://www.business2community.com/mobile-apps/2017-mobile-app-market-
statistics-trends-analysis-01750346#YxjRy1skCRYTk6zo.97>. [Accessed on 7th
September 2017].
Music Industry Blog. 2017. [Online]. Available through:
<https://webcache.googleusercontent.com/search?q=cache:Lql0dtGzylsJ:https://
musicindustryblog.wordpress.com/category/apple-music/
+&cd=1&hl=en&ct=clnk&gl=uk>. [Accessed on 7th September 2017].
6

APPENDICES
Appendix 1
Customers will take subscription of Spotify app for one, three or six month. Along with
this, if they want to take it for a year then they can take it as it is less costly.
Appendix 2
There are various competitors of Spotify such as iTunes, Amazon music and so forth. If
they develop effective strategies for their company then they can easily compete them in
competitive world. As a result, they can easily improve their market share and along with this
revenues.
Appendix 3
Strength:
◦ They are providing best quality of music to their users.
◦ People can easily download music form their app by taking premium
subscription and listen it offline also.
◦ Subscription of application cost is not much high as compare to their
competitors.
◦ Spotify is well known brand in country, thus they will take advantages from their
rivals easily.
◦ Whenever they update their app, they add extremely best features into it with an
innovative way.
Weaknesses:
◦ Cost structure of association is not much effective.
◦ Acquisition is not much appropriate.
7

Appendix 4
Source: Music Industry Blog. 2017.
8
Illustration 1: Market Share.