Spotify: A Revolution in the Music Industry?*

            


Details

Case Code : CLBS064
Publication date : 2009
Subject : Business Strategy
Industry : Music Industry, Online advertising
Length : 04 Pages
Price : Rs. 100

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Key words:

Spotify, online music, online advertising, subscription, iTunes, P2P, last.fm, Pandora, Universal Music Group, Sony BMG, EMI Music, Warner Music Group, music piracy

Note

* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

 


Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

The case talks about Spotify, the ad-funded online music service which began operations in October 2008. Spotify followed hybrid business model that generated revenues from both advertisements and subscriptions. The short case specifies the way in which the service enabled music companies to earn revenues and reduce music piracy, and mentions the unique advertising opportunities which Spotify provided to advertisers. It also touches on the limitations of the service and the competition it faced from other online music services.

Issues:

 » Hybrid Business model.
 » New online advertising opportunities.

Introduction

In March 2009, Daniel Ek (Ek), the founder of Spotify, an ad-funded online music streaming service, announced the launch of new kinds of targeted advertising opportunities for advertisers on the service. Ek said that Spotify would offer advertisers the facility to buy ad spots in such a way as to target listeners by location and mood (i.e., the kind of tracks that they were listening to)...


Questions for Discussion:

1. What are the key strengths of Spotify’s hybrid business model? Do you think the business model is sustainable in the long run? Will Spotify put an end to music piracy?
2. What are major challenges which Spotify faces? How can competitors like iTunes, last.fm, etc deal with the competition posed by Spotify?





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