Problems Spotify Face Paper some analyses are problematic. For example, you consider the bargaining power of suppliers is “low” for Spotify. This may not b

Problems Spotify Face Paper some analyses are problematic. For example, you consider the bargaining power of suppliers is “low” for Spotify. This may not be the case. Please find out who are Spotify’s major suppliers and gauge their bargaining power over Spotify.

Please do careful research to find out what are the most pressing challenges for Spotify.

You need to use another Blue Ocean Strategy Canvas figure to help Spotify to find a blue Ocean.

You also need to provide three concrete strategies in this section.

Section IV: Business Proposal(This is the requirement for this section)

1. What are the firm’s main problems?

External environment

Threat of substitutes

Paradigm shift

Bargaining power of suppliers

Or others

Internal operations

Business models

Leadership

Culture

Products

Or others

2. Use Blue Ocean Strategy canvas to propose an ideal value curve relative to competitors.

3. Provide three concrete strategies to help the firm to survive and thrive.

Use data to support your proposed strategies. Running head: SPOTIFY RESEARCH PAPER
Business proposal
Tutor
Student
Institution
Date
SPOTIFY RESEARCH PAPER
Problems Spotify Faces
i)
Some of the very prominent musicians do not like Spotify for their reasons.
For instance, in 2013, Thon Yorke claimed the company was desperate who forced itself
into becoming a ‘middleman’ in the industry. Such resistances from favorite artists are a big
challenge to the company because they won’t allow their music to be used by the company.
Other top artists in industry withhold their albums for the first months after their release so that
they can sell first on CD before submitting them to Spotify. Another problem comes from the
young artists in the industry who feel that Spotify benefits only the prominent artists. They see
the company like it is made just to channel money to prominent artists leaving behind the
upcoming stars.
ii)
Competition from bigger companies;
Youtube and Apple Music. Youtube and apple are giving Spotify a very tough
completion having been in the industry for so long. Youtube, for example, is more popular
among the younger generations and thus they choose to stream their favorite music through the
channel.
Threat of substitutes
Spotify faces a severe threat from more prominent companies in the same industry that
offer the same services. They included iTunes and YouTube which charge their subscribers
smaller fees as compared to Spotify. They also command a lot of audience than Spotify. To
ensure survival in the industry, Spotify should act to counter the competition and keep its
customers as it adds more. This can be done through the harmonization of their premium fees
2
SPOTIFY RESEARCH PAPER
3
and the improvement of their services by making sure that everyone visiting their site finds every
kind of music that he or she needs. Where Spotify beats its substitute like radio is where it gives
the user the ability to create a playlist (Tschmuck, 2016).
Paradigm shift in Spotify
Recently, Spotify launched a free radio like application modeled after Pandora which
turned in a high demand account and had a premium membership. The company has rooted itself
in every country it has launched its services, and more than 20% of its free listeners have
converted into premium users, and this has increased the company’s income drastically over the
years.
Bargaining power of Spotify Suppliers
The level of bargaining power of suppliers that Spotify faces is quite low currently. The
artists that refuse to have their music posted for streaming are fewer, but the refusal decisions
made by the artists are not specific to Spotify only, but they affect the whole industry including
its competitors. Typically, if an artist is against the idea of allowing his or music to be streamed,
he or she won’t deny Spotify the rights to use his or her music, and then he goes out and hands
over his music to another streaming service provider. On such situations as where an artist
refuses to allow streaming of his or her music, Spotify has considerably possibility of swaying
the artist if they discuss the terms that the artists need to be met before allowing their music to be
used. Adele for example strongly denied Spotify the right to have her album 21 made available
for Spotify free users and requested that only premium user could have access to it. Spotify
rejected her request because its catalog was large for all its users. The album was not made
available to both free and premium user, but it was made available to all the user later. Spotify
SPOTIFY RESEARCH PAPER
4
negotiates with individual countries that it wishes to enter into business in and it has been
successful in most of the negotiation, and thus this is not a threat to its future market.
Spotify business model
Freemium business model is the model strategy that Spotify uses and makes money
through subscription fees and advertisements. This business model that Spotify uses is not
complicated and works like other fermium services, for example, Youtube and MailChimp. The
primary source of revenue to the company is the premium subscriptions from users. Spotify
offers three different subscription types, they include;
a)
Spotify Free Version
The free version is the most basic of all the subscriptions where a user who chooses to
use this version find access to all the Spotify content but with certain limitations such as a lot of
advertisements and the lack of an option to listen to music while you are offline. You are also
limited to the quality of the songs that you listen to.
b)
Spotify premium
This is the premium version of the app that is priced at $9.99 monthly. This version is
free from all the restrictions that the free version has.
c)
Spotify family version
This version is a premium subscription for people that are living in the same address. The
features of this version are just like those of the premium version. It can allow access to at most
six people that are living in the same address.
SPOTIFY RESEARCH PAPER
5
Products that Spotify offer
Spotify was founded in 2006 with the main objective of the company is to offer music
streaming services to users.
Spotify Company Culture
It has a great company culture and great workers and also great products and brand. It has
talented, likeminded and supportive employees.
Spotify and Blue Ocean
The industry of music streaming begun in the late 2000s, and there it can be considered
as a matured industry despite the technological standpoints which have affected it. Younger
industries mostly focus on doing a single perfectly and then venture blue ocans in the market.
Music streaming industry achieves a particular place in buyer value map developed as indicate
by the red dots below. There is only one thing where current Red Ocean for music focuses on,
which is the simplicity of use. A firm that gives such services works to advance a product which
is easier to operate, and they do not adjust to any studying curve to operate an application or
software. It is easy since it is like typing in a finding a radio station or an artist and then pressing
the play button. Many firms offer music streaming devices or applications. The industry has
become oversaturated in just over a decade, bringing different indistinguishable products but
with a different name. However, blue oceans are targeting to expand into the industry. Using
blue, we identified blue oceans as indicated by dots in buyer utility map below. What will
SPOTIFY RESEARCH PAPER
6
happen if a firm is to provide utility through the convenience of use, the convenience of delivery
and the image associated with how product is used? (Araújo et al., 2017).
For an individual to deliver a product conveniently, the product must be more important
than the software or the application itself. In the music streaming industry, the final product is
much import than music flowing through the service. This implies that the final product is much
essential. It can be enhanced in various ways. In Delivery of original product, the software or the
application is downloaded merely from app stores or secure website. There are still other ways of
music streaming to the consumer. What are the additional ways in which a firm can make it fun
to use while using a product and increase user interactivity? Spotify has come up with ways to
satisfy goals and proceed into the blue ocean. Expansion in Blue Ocean is paving the way for
turning Spotify into a functional operating system preferred in music (Cajander et al., 2016).
To demonstrate how Spotify has improved to move into Blue Ocean, we have come up
with a Strategy Canvas to look at the factors relevant for the success of the industry. These
factors include music catalog size, price, range at which the platform is available, unlimited
access, the sound quality on among others. Data was gathered from many sources. Mashable and
time magazine were used to evaluate Spotify base and platform number. Spotify entered the
market and was able to capitalize in areas that did not venture by competitors — creating an
ecosystem for the customer to improve on how music provided is the aim of Spotify. Spotify has
considered vital areas to stimulate users and stay ahead of their competitors. To raise the value of
curve to surplus that of competitors and attract more customers, Spotify can reduce some factors
far below standards creating a room for building new elements that will benefit the customer
Spotify should some revenue stream for it to increase the profit generated and attain
sustainability. Is need to maintain the artist, offer intensive advertiser, mark the buy-in and
SPOTIFY RESEARCH PAPER
7
achieve a status lifestyle brand. They should start showing and giving the artist the royalty they
deserve to keep InTouch with the artists. Most artists are against streaming service because of the
little royalty rate that is offered to the artists. Thom Yorke from the Radiohead band deleted all
his songs from Spotify mocking them for not paying the artist, and instead they smuggle the
money among the shareholders (Cajander et al., 2016).
Building trust through transparency and equity amongst the artist is a crucial activity for
the company. There is this one time that Spotify gave a report that explained the model of their
artists` royalty and compares it to the rest of the industry. This showed openness among the
company and the artists and encouraged them to continue buying in. To create a good rapport
with the advertiser, Spotify should leverage their technology. They can do this from the recent
acquisition of big sound and echo nest to deliver consumer data that is relevant to the advertiser.
Building such understanding and consistency with the customer and bring them together as it is
on their website.
Recommended paths forward
Spotify should employ the strategy of collaborating with another brand to make an immersive
experience in advertising. Music inclusion and playlist make the experience of the user personal
this is achieved by the remixing their creation playlist in a way that resembles those of the 80s
move. Spotify should have their playlist available, and the playlist should be selected by the fans
to avoid it from being generated by the tastemakers. Some user view curated playlist as an
additional advertisement rather than just an agenda of a record label. Spotify should also look for
a way to fix this. To capitalize on the lifestyle brand, Spotify could start sponsoring concerts and
other events which will help people together. According to Neilson report, streamers likely to be
SPOTIFY RESEARCH PAPER
8
the heavy spenders on tickets at given events. Hosting events will bring income for Spotify.
Spotify could use concert and other activities to create more live stream s for music (Sydow et
al., 2017).
Conclusion
Spotify can also sell services directly to offline and online users through their platforms.
The functionality has been availed to some Spotify users through BandPage. This creates
another source for Spotify and the artists. It will be beneficial to give artists autonomy hence
benefiting Spotify. Giving more permission to different holders will allow more songs to appear
for premium for users which will increase income for Spotify. Spotify will be striking deals with
new and qualified experts in different fields. Employing experts to conduct research and advice
on new ways of expanding market will of great help to Spotify. Experts will also advise on
excellent customer handling to ensure that Spotify can keep its customers. Poor customer
services will discourage available customers and also discourage new users from joining Spotify,
hence reducing profit margins. Spotify should allow metrics to control how holders generate
demand and revenue and therefore encouraging individual who doesn’t have complete
confidence with Spotify to buy products. Introduction of a smartphone at low-cost in the market
will open more opportunities to get affordable music. This will increase music revenue globally
by a noticeable percentage. Expanding the market to different will also create a significant
demand for the products. The broad market will increase sales and hence maximizing profits
made. With the increase in the new market, there will emerge new issues which sportily will deal
with. The problems could range from legal to social and demand.
9
SPOTIFY RESEARCH PAPER
References
Kristinsdottir, S., Larusdottir, M., & Cajander, Å. (2016). Responsibilities and Challenges of
Product Owners at Spotify-An Exploratory Case Study. In Human-Centered and ErrorResilient Systems Development (pp. 3-16). Springer, Cham.
Schettino, V. J., Braga, R., David, J. M. N., & Araújo, M. A. P. (2017, September). Spotify
characterization as a software ecosystem. In Proceedings of the 11th Brazilian
Symposium on Software Components, Architectures, and Reuse (p. 8). ACM.
Schub, J., Ivarsson, A., & Von Sydow, O. (2017). ” Innovation is at the heart of everything we
do”-How to sustain innovation and entrepreneurship, the case of Spotify.
Tschmuck, P. (2016). From record selling to cultural entrepreneurship: The music economy in
the digital paradigm shift. Business innovation and disruption in the music industry, 13.

Purchase answer to see full
attachment