![]() ![]() ![]() The following diagram shows part of this value network and shows what services Spotify is offering to various stakeholders. Spotify is able to offer its services thanks to a large value network of partners and suppliers. Compared to other audio streaming services, Spotify has a unique catalog containing the back library of all big record labels (Sony, Warner, Universal, Merlin).Īs we will see, this is both a strength and a vulnerability of Spotify.Other streaming providers such as Apple Music and Amazon Prime Music also offer these advantages. For users, it allows the discovery of new songs by Spotify’s recommendation mechanism.For new artists, it offers a way to gain exposure and receive royalties in a large audience.For advertisers, it offers a new avenue of getting brand awareness and conversion.For intellectual property holders such as record companies and independent artists, it has put an end to piracy.This creates a number selling points for different stakeholders. It is financed by subscriptions and by ads, for those who don’t mind hearing ads while they are listening to music. Spotify streams audio, mostly music but increasingly also podcasts. What’s the problem? What are the prospects of turning this around? In this blog we deconstruct Spotify’s business model and review the possible ways out of this predicament. Artists receive $0.0084 or less per stream and are bitterly complaining that they cannot live off royalties from music streamed by Spotify. Since its founding, Spotify has never made a profit. At the end of 2020, Spotify had 345M monthly active users, of which 155M are paying users, with a subscription. The number of monthly active users grew 27% year-over-year. On top of that, the Spotify library contains 2.2M podcasts. Today, its music library contains 70M tracks and it grows with 60 000 tracks per day. Its mission is “to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by these creators.” Spotify was founded in Sweden in 2006 by Daniel Ek and Martin Lorentzon. ![]()
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