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Spotify. Strategy to remain the leader in the music industry.

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Spotify. Strategy to remain the leader in the music industry.

  1. 1. Spotify S T R A T E G Y T O R E M A I N T H E L E A D E R I N T H E M U S I C I N D U S T R Y
  2. 2. Market definiton Digital music streaming services, e.g. Spotify, Deezer or Apple Music, offer unlimited access to their content libraries either for a monthly subscription-fee (without any advertising) or ad-supported, with forced commercial breaks between the tracks. Music can be streamed to various connected devices. Internet radio or video streams (e.g. YouTube) are not included. Music streaming in 2016 Revenue mUSD 1,931.3 User penetration 53.70% in 2016 expected 62.38% in 2020. Revenue mUSD  351.4 User penetration 20.40% in 2016 expected 27.32% in 2020. Revenue mUSD  309.7 User penetration 44.15% in 2016 expected 55.05% in 2020. Revenue mUSD  229.0 User penetration 26.53% in 2016 expected 33.95% in 2020. Revenue mUSD  141.9 User penetration 19.79% in 2016 expected 26.71% in 2020.
  3. 3. Amazon Prime music Launch in December 8, 2015. More than a million songs. 54 million subscribers worldwide. Audio: 256 kbit/s VBR . Ad-free music streaming with a $99 annual Amazon Prime subscription. Limits international access by checking users' credit card issued country. Music service available to Sonos customers (US, UK, France, Germany). Freemium streaming business model. Market share in the US - 7%. Platforms - Windows, OS X, iOS, Android, FireOS.
  4. 4. Amazon Prime music Possibility to save high-quality Prime tracks to the device for offline listening. Playlists for specific moods and activities. Recommendations based on the music already played. Ad-free prime stations. Account sharing: One device at a time can actively stream music, while up to four can play previously downloaded music offline. Up to 10 devices can be signed in to the same account. Features
  5. 5. Apple music Launched in June 30, 2015 in over 100 countries worldwide. More than 30 million songs. 17 million subscribed users worldwide. Owner: Apple Inc. Audio: 256Kbps in AAC. 3 months free trial before becoming “paid only”. $9.99 / single license; $14.99 / family license; $4.99 / student license. Subscription business model. Market share in the US - 15%. Platforms - Apple’s mobile devices and watch, as well as Android devices. Mac and Windows desktop applications are also available.
  6. 6. Apple music Strong curation, Apple Connect social network, Beats 1 Radio and genre- based stations Account sharing: The service can be used by only one device at a time for both the free and paid versions. Family plans, however, allow for up to six people to stream music. Offline playback: Paying subscribers can stream music when their devices are not connected to data or Wi-Fi networks. The iOS application is integrated with Siri voice commands. High-profile advertising. Vendor lock-in through network effects and DRM encumbered downloads, occasionally deleting original music from a user’s hard drive and replacing it with DRM encumbered versions. Apple has the highest conversion rate from “free” to “premium” in Japan. Features
  7. 7. Deezer Launched in France in 2007. Became available in the US in July 2016. 40 million songs that reach more than 180 countries. 16 million users worldwide, with 6 million subscribed. Founder: Daniel Marhely Key people: Jonathan Benassaya (Co-Founder), Hans-Holger Albrecht (CEO), Simon Baldeyrou (CFO). Audio: 20kbps MP3, 1411kbps FLAC £9.99 a month, £14.99 a month Elite, Free ad-funded service. Strong curation, Facebook integration, optional apps, recommendations based on listening habits, mixes. Ad-free service only for premium users, free streaming business model (freemium). Unlimited ad-supported free access to on-demand music. Platforms: Android, iOS, BlackBerry, web player.
  8. 8. Google Play music Launched in November 16, 2011. More than 30 million songs. Audio: 320kbps MP3. Basic service, which lets users upload up to 50 000 songs to personal cloud libraries, is free. 30-day free trial of "All Access”. A subscription plan, which lets users stream most commercially available songs, is available for $9.99 a month, includes access to YouTube’s subscription service, YouTube Red, which eliminates ads on that platform. US$14.99/month for "All Access" for up to 6 family members. Freemium business model. Market share in the US - 8%. Platforms - Apple and Android apps, plus web browsers.
  9. 9. Google Play music Unlimited subscribers have access to on-demand music, while users of the free service are able to customize radio stations. Account sharing: With Unlimited Google Play, users can authorize up to 10 devices, but can stream only on one device at a time. Offline playback: Available only with an Unlimited subscription. Features
  10. 10. Spotify Launched in September 2008 by Swedish startup. More than 30 million songs. 100 million users, 30 million subscribers. Founders – Daniel Ek, Martin Lorentzon. Audio: 320kbps OGG Free version comes with ads. Ad-free Spotify Premium costs $10 a month, family and student discounts available. Freemium business model. 7 types of ads: Audio Ads, Display Ads, Billboard Ads, Homepage Takeovers, Branded Playlists, Lightbox and Advertiser Pages. Ads vary in size, type and user engagement. Market share in the US ­ 13%.  Platforms ­ Apple and Windows mobile and desktop computer applications;Android phones; PlayStation; Roku, a streaming device for televisions; and web browsers. 
  11. 11. Spotify Moderate curation, Facebook integration, optional apps, recommendations based on listening habits, genre and artist-led radio stations, Discover Weekly playlists 'On Tour' feature, which means you'll know if an artist you've searched for is playing a concert in your country any time soon. Account sharing: Music can be played on only one device at a time, with up to three devices signed in to the service at any time. Offline playback: Only for Premium users. Features
  12. 12. Tidal Launched October 28, 2014 More than 30 million songs and 75,000 videos. 3 million subscribers. Developer – Project Panther Ltd. (Jay Z) Audio: 1411kbps, 16-bit/44.1 kHz FLAC and ALAC music streams $9.99 a month for Tidal Premium or $19.99 for Tidal HiFi, which offers higher-quality sound. Both versions are ad-free. Subscription business model. Market share in the US - 5%. Platforms - Apple and Android apps, a PC app and web browsers.
  13. 13. Tidal All subscribers get music and videos on demand. In addition, they get access to Tidal X, a program that gives artists a platform to connect with their fans through special events, including concerts. Exclusive content from artists, rewards features, ”Tidal rising” for unknown singers. Account sharing: One device can stream music while connected to cellular data or Wi-Fi, and three devices can play music in offline mode at one time. Offline playback: Both subscription levels allow users to listen while their device is offline. Features
  14. 14. Main strengths Apple - Hardware Google - Advertising Spotify - Data
  15. 15. Strategy for Spotify The need to increase the number of subscribers in order to get more revenue without decreasing the royalty fees to the labels and artists. Obtaining streaming rights to a large library is a key factor in the success of a streaming service. Become more sustainable (more emphasis on data and information). Goals
  16. 16. Strategy for Spotify Offering limited free trial periods as an incentive for consumers to make the switch (Apple example), leaving the subscription price low. Partnering (Sonos example, Soundcloud – to expand the music library) Limit free streaming to an introductory offer, incentivizing paid subscriptions through exclusive offerings (Tidal example). Organise a channel for artists to communicate with fans, transform Spotify into an artist marketing platform. Windowing. Organize crowdfunding for improving the services, thus saving resources. Enter the market of audiobooks and podcasts to raise income. Initiate a PR campaign for market correction to properly value music consumption as Spotify has problems with artists not willing to cooperate because of its business model. Solutions
  17. 17. Thank you for the attention

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