Report discussing Spotify's strategy Essay Example | Topics and Well Written Essays - 2000 words

Report discussing Spotify's strategy - Essay Example Spotify should use current technology to be stable and compete with the other companies. Introduction Spotify is a Swedish online streaming company offering online music service to the user that they can stream up to 15 million tracks on demand by using unique technology. It still lags behind after Pandora as a market leader. Spotify also introduced lightweight software, which allows an instant listening to albums and tracks without buffering delay. Consumers subscribe monthly premium to access the service. Spotify paid free subscriptions to everyone in order to expand the rate of service (Gammons, 2012). The company offered free accounts and opened free registration in United Kingdom. Spotify closed opened registration when Spotify mobile service was released. Technology is a growing necessity in all types of businesses. As time goes, people learn the importance of technology one by one. This make it impossible to separate technology from the people as it is necessary in day-to-day activities. Technology in Spotify has brought tremendous growth in the company through advertising. Sporty can post their new services online to create new revenue streams and new markets. Technology is also important in decision-making process leading business managers and chief executive officers to focus on innovation in business (Marshall, 2012). Spotify has divided the digital music industry into two submarkets; digital download market consisting of Amazon and iTunes and streaming market which has many competitors. According to the study conducted in 2011, the revenue of digital music industry has grown by 8%. The growth rate of streaming market is greater than that of the download market. Streaming market generates 10% of the revenue of digital music industry (Marshall, 2012). Many companies with similar business models operate in streaming industry leading to strong competition in the market. Companies can only be differentiated from each other by; features regions of operati ons, variations in packaging and licensing of music libraries. The costs of switching from one streaming service to another are very high. This has created a limited compatibility and transfer between the streaming services. The streaming companies are trying to include network effects in their services by introducing social components. Users are granted permissions to create collaborative playlists, they can follow what other people, and friends are listening on the network (Daft, 2011). Network effect adds value to the services leading to attraction of more clients. Streaming companies has essential partners and record labels are natural which creates ready market with strong indirect network effects. Availability of content is important to attraction of customers. When there is large music in the library, the streaming service will be much popular. The streaming industry is a two-sided market where companies should create virtuous circle between customers and record labels. When the subscribers and users are more in a service, there should be more labels having their music recorded on the services. This will lead to attraction of more customers to the larger library available. On the other hand, it is expensive to obtain streaming rights to a large library for successful streaming of services. The primary tactic on how to gain market share is