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A Market Analysis for
Spotify
Holman, Malcom J.
Full Sail University
Project & Portfolio II: Business and Marketing
December 18, 2021
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EXECUTIVE SUMMARY
This analysis is a report that shows the current standing in the market for Spotify, and
ways to help increase the year-to-year income that is usually in the red for the company. This
report will focus on Spotify’s current position in the market, and how to keep the services in the
top spot for music streaming apps. This report will also review the stock revenue of Spotify
Technology S.A. to see if there is anything that can be done to help bring in more revenue.
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OBJECTIVE
Finding a new route that Spotify can take to earn more revenue and keep true to the
company being an app for streaming music.
RESEARCH METHODOLOGY
The information found for this report was primarily from an external source. The
financial information was also listed on the company’s investor page that can be easily accessed
by parties interested in investing in the company. All the information was gathered December
2021, and the collected data is less than a year old. The parent company, Spotify Technology
S.A., released this information to remain transparent to the public.
RESEARCH AND KEY FINDINGS
Spotify takes pride in their music streaming services. This this their primary means of
making money. Another portion of the company’s revenue comes from the ad-supported
services that are powered through the app.
According to the chart that is listed below,
Spotify report 91% of their listed income was
from their premium services, and the other 9%
income is the ad-supported services that allow
companies to promote their goods and services. Even though the company managed to keep
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themselves above water, the company recorded a net loss of €581 million in FY 2020. That net
loss was more than three times the net loss of €186 million posted in the previous year. The fact
that Spotify stands on top of the other streaming services shows their strength to dominate the
market, but the company is constantly being threatened by their negative yearly revenue.
Spotify has been listed as the number 1 music streaming service by consumers and tech
list multiple times. One of the biggest weaknesses
for Spotify is their failure to properly compensate
their artist who support the company’s platform.
While the artist continues to deliver their music to
the audience on Spotify, the company is still paying
less than a penny per stream. This can become an opportunity to become competitive by giving
more money back to the artist in the program.
Spotify has become more profitable by listing comedy shows as a part of their library.
Bring this kind of innovation to the streaming service has helped changed the income situation for
the better. Spotify’s user growth has risen since implementing this change. These kinds of changes
are a promising sign that the company is headed back in the right direction.
CONCLUSIONS
Spotify is still currently sitting on the throne as one of the top streaming services. The
biggest issue in revenue heavily relies on the premium services that are provided. If there
happens to be a sudden drop in the number of subscribers, the company will not have much of a
leg to stand on. Another issue lies with not paying Spotify artist for their streams. 0.35 cents per
stream hurts new artist who are trying to continue making a name for themselves. If subscribers,
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artist, and other individuals decided to leave, the company would have no choice but to close
their doors.
RECOMMENDATIONS
Spotify should do more for the artist if they are going to pay them less than a penny per
stream. One of thing that could help is setting up perform opportunities for artist around the
world. This would allow them to feel that the streaming service is trying to help them succeed.
The artist are the ones keeping the apps music library updating every day, so taking away that
source will hurt the company. Another idea is to continue the masterclasses, collaborations, and
other helpful tools that were given to the artist during the pandemic.
Adding merchandise would help increase revenue through all sources. When Spotify released
the Car Thing, it immediately sold out and had such a high demand for the product. Home and
Car audio accessories would help skyrocket sales data. Health change from being streaming
only to streams and merchandise would go far.
Spotify has started a waitlist to change podcast to video podcast. This is an excellent
idea. These video podcast should be accessible on all platforms that Spotify streaming is allow.
Unless there is a safety protocol put in play like the one made for Apple Carplay, this technology
would benefit the company.
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REFERENCES
Caddy, B. (2021, October 22). The Best Music Streaming Services 2021: Spotify, Apple Music,
tidal and more. TechRadar. Retrieved December 19, 2021, from
https://www.techradar.com/best/the-best-music-streaming-services-2021
Johnston, M. (2021, October 1). How Spotify makes money: Premium Service generates the
biggest share of revenue. Investopedia. Retrieved December 19, 2021, from
https://www.investopedia.com/articles/investing/120314/spotify-makes-internet-music-
make-money.asp
King, A., & Smith, D. (2021, November 5). What's the best-paying music streaming service for
artists? Digital Music News. Retrieved December 19, 2021, from
https://www.digitalmusicnews.com/2021/07/14/best-paying-music-streaming-service-for-
artists-2021/
Published by Statista Research Department, & 4, N. (2021, November 4). Spotify: Quarterly
Revenue Worldwide 2021. Statista. Retrieved December 19, 2021, from
https://www.statista.com/statistics/813828/spotify-revenue-quarterly/
Salzman, A. (2021, October 27). Spotify has finally found a profitable tune. Barron's. Retrieved
December 19, 2021, from https://www.barrons.com/articles/spotify-has-finally-found-a-
profitable-tune-51635346820
Spotify business model. Strategyzer. (n.d.). Retrieved December 19, 2021, from
https://www.strategyzer.com/business-model-examples/spotify-business-model
Spotify Technology S.A. announces financial results for third quarter 2021. Spotify. (n.d.).
Retrieved December 19, 2021, from https://investors.spotify.com/financials/press-release-
details/2021/Spotify-Technology-S.A.-Announces-Financial-Results-for-Third-Quarter-
2021/default.aspx
Spotify. (n.d.). Introducing video podcasts on Spotify – News – spotify for podcasters.
Introducing Video Podcasts on Spotify – News – Spotify for Podcasters. Retrieved
December 19, 2021, from https://podcasters.spotify.com/blog/video-podcasts
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IMAGES/CHARTS
Caddy, B. (2021, October 22). The Best Music Streaming Services 2021: Spotify, Apple Music,
tidal and more. TechRadar. Retrieved December 19, 2021, from
https://www.techradar.com/best/the-best-music-streaming-services-2021
Johnston, M. (2021, October 1). How Spotify makes money: Premium Service generates the
biggest share of revenue. Investopedia. Retrieved December 19, 2021, from
https://www.investopedia.com/articles/investing/120314/spotify-makes-internet-music-
make-money.asp
Spotify. (2021, October 8). Logo and brand assets. Spotify. Retrieved December 19, 2021, from
https://newsroom.spotify.com/media-kit/logo-and-brand-assets/
