Spotify has introduced the music service to the listeners and charge a certain rate for ad free music. However, it does not rely on this for its source of revenue. It largely relies on the free service where the listeners will have to bear with the adverts. At this point, it does business with other firms that want to advertise their brands to the listeners. The main target for business is therefore dealing with other companies that want to reach the audience.
On the same platform, there is collaboration with major record labels where they claim a certain percentage stake in the company and in turn provide their music libraries to Spotify (Nylander 2009). Spotify focuses on doing business with other businesses in its plans. It has tailored it product for mobile phones and approached the mobile phone making companies like apple in an effort to do business with them (Emerald). This is a direct challenge to Apple’s iTunes though and touches on the competition end. Mobile Commerce
Spotify has produced a mobile version of the application that can allow users with premium accounts to access and listen to music wherever they go. It also allows the users to download a certain
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Given that all the mobile users will have to be premium users, the focus of mobile versions will be to create a customer base where the services will be like a contract between Spotify and the user (Ionescu 2009). This eliminates the advertisers from the picture and allows Spotify to compete with earlier established businesses on the same line like Apple, while still spreading the risk. Instead of relying on the advertising source alone, the company can now create a one to one relation with the music fans through their premium accounts.
Conclusions It is a good business plan for Spotify to create such a huge market base by having so many users registered, both free and premium categories. The plan of pushing adverts into streamed music provides an excellent way of gaining the revenue from brands. On the mobile world, it provides a good way of reaching a wider market and a premium account for the mobile is a plus on the revenue. This was a wise decision considering the processing power of phones cannot be compared to that of PC’s.
The strategy of extending into the mobile world was a good way of preparing for the future of IT with the trends in pervasive mobile programming. Mobile marketing will form an even wider market considering the more frequent use and an extension of the PC use after work hours. Recommendations The competition in the market is high and Spotify will have to deal with some issues, especially with the application interface and specifically the technology on the size of bandwidth among other resource utilized on users machines.
Criticism is usually on the fact that the interface does not give a user the access to control the amount of resources like bandwidth that Spotify uses against other systems on the same machine. The issue of coming up with a way of establishing the classification of music sources with their effect on the market using the users data to determine the ratings would be an important thing to indulge in, in order to establishing a fair royalties to the artists in order to keep everyone happy and the future of Spotify bright (BBC News 2010).
More concentration on helping the production teams with useful demographic and ratings information will give the company a strong relationship with the source of music, the medium they use to make money.
BBC News, (2010) ‘Spotify boss Daniel Ek sets out future plans’, [Online], Available: http://news. bbc. co. uk/2/hi/8478599. stm Porter M. (1998) ‘Competitive strategy: techniques for analyzing industries and competitors’, Free Press, ISBN 0684005778, 9780684005775. McCormick, A. (2009) ‘Spotify and Last. fm moot partnership’, Britannica article; Revolution (14605953) [Online], Available: https://news.spotify.com/int/2010/03/31/iphone-v4/