Spotify and music streaming industry

spotify (2)

Most of us know the music streaming platform Spotify and how it is one of the most successful music streaming services of all time, it is available in all of Europe, North and South America and Oceania. The success of this streaming service lies in the two options it offers to its customers. There is a free trial which is offered to the consumers who are trying to get accustomed to the service and it is made possible entirely by advertisements by various brands. The second option offered enables consumers to subscribe to the service by paying just 9.99 USD a month which allows them to download and listen to music offline.

Spotify

Its strength lies its strong consumer base and its 30 million paying subscribers. It is highly unlikely that a  music streaming service like Spotify can run at a loss due to it having paid subscribers, making revenue with its advertisements and having an ease of access.

But with any streaming platform there are a few setbacks, these include the fact that Spotify does get a bad reputation due to it not reimbursing the artists on its roster fairly and many major artists having gone public with this information. one example is Taylor Swift leaving the service due to the same reason. An artist makes 0.007$ per stream of their songs.

meaning… 

Even though most artists are becoming open to the idea of Music streaming and letting the mass populace listen to their music for free it still makes sense that spotify do more and use this to their advantage. There are new Marketing trends  that emerge every year. this is no different for 2016. For one thing Spotify is going to have to realize that most “in your face” marketing is a fading trend in marketing and modern day consumers have no patience for advertising which feels forced and is trying too hard to be relevant.

where it really starts to go downhill…

For every song or album streamed on Spotify, 70 percent of its income goes to the Rights Holders and only 30 percent goes back to Spotify in revenue. This is basically the case as the streaming service has a deal with three of the major music Labels in the world, Sony, Universal and Warner Bros music. It used their catalog to save costs and then in return they owe these three music labels.

The traditional music platforms of buying music through CD’s is dying. So another issue that arises is why these labels would ever even try and renegotiate a deal with Spotify. Hypothetically if Spotify earns around 2 Billion USD annually, these giants take 1.5 billion USD as their share.

What makes it a little easier for other streaming sites to become more successful and overtake Spotify in market share is the availability. Spotify isn’t available in 2 of the biggest markets in the world, China and India and in all of Asia. Other domestic streaming services in these countries  are taking over and Spotify risks losing out to these markets.

In all fairness,  none of the consumers are going to be happy seeing spotify fail and go under. Its a very interesting service and the benefits and ease of its use is very valuable for its users. In fact, students and music enthusiasts would find it really hard to survive without it. The service has revolutionized the idea of music streaming and it continues to be the the leader in music streaming services closely followed by the likes of Pandora, Apple music and google music.

But with companies realizing the popularity of music streaming, its becoming  apparent that there are many more streaming services that are soon to come up in the present marked scenario. A good example would be Guvera, which is present in 28 countries including India with 1.3 Billion people.

Overall 2016 is the year to look out for, with Video streaming in these websites becoming a thing we’ll have to see who perfects this new feature and dominates the market.

By Abhishek Mujumdar. 

References

http://www.priceintelligently.com/blog/bid/182324/Spotify-s-Final-Song-Why-Spotify-is-Doomed

https://claudiacbrown.wordpress.com/2015/01/22/swot-analysis-spotify/

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