PORT 2

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A Market Analysis for
Spotify Music
Diamond Turner
Full Sail University
Project & Portfolio II: Business and Marketing
03/27/2022

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EXECUTIVE SUMMARY
This analysis report obtains the current market for Spotify premium music subscription.
The report will look at the streaming and subscribers’ growth and the effect that those trends
have upon the company. The report further includes recommendations and strategies for Spotify
premium music can use to increase their subscriptions and subscribers to further increase the
revenue for the company, with Spotify staying at the number 1 music streaming service in the
US This report states a new focus on how Spotify can continue to adapt and improve within the
streaming service industry for music.

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OBJECTIVE
Based on findings within the current market that could help Spotify premium music can
expand in different countries and increase revenue and change strategies to keep the company at
the top of the music streaming service. They should utilize endorsements and strategies to
increase payout for artists to keep them and increase revenue.
RESEARCH METHODOLOGY
The informative gathered in this report is secondary external information gathered from
online data bases and the internet during the years of 2021-2022 researched in March. Financial
information that was gathered was extracted from the exact day and year that I found the
information.
RESEARCH AND KEY FINDINGS
Spotify is well known all over the world. The CEO is Daniel Ek. Daniel Ek poached the
founder of uTorrent, Ludvig ‘Ludde’ Strigeus, to lead the programming and development of
Spotify” (Daniel Ek, Spotify 2021). In the same year 2006 Ek and Lorentzon launched

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Spotify. “Prior to Spotify, Lorentzon was the co-founder of TradeDoubler, which acquired
Ek’s Ad vertigo company the month before Spotify was founded – March 2006 for SEK 10
million" (Daniel Ek, Spotify 2021). In 2008 Spotify branched out to numerous of territories
such as UK, Germany, France, Italy, Spain, Finland, Norway, and Sweden. The music
business continues to go up in its worth in millions of dollars “At the close of 2020, Spotify’s
market cap on the New York Stock Exchange was worth $59.66 billion, according to Charts”
(Daniel Ek, Spotify 2021). Spotify currently has the largest number of subscribers and looks
like it will soon be taking out some competitors like Pandora Music and further to gain
more worth.
Spotify Is slowly becoming the biggest music streaming service
and continues to stay at the top for the most subscribers out of the music streaming
platform. It caters to all various types of age group and cultures. Spotify “rose from 7% of
the U.S. market in 2010 to 83% by the end of 2020 and recorded-music revenues saw their
fifth consecutive year of growth, topping $12.2 billion, per the RIAA” (Robinson, 2021). No
one’s music taste is just one artist or culture or just one category. There is always
something someone may find that sounds beautiful and something else someone else may
not like.
In Spotify premium music trends influences their market while the grow they have to add
songs to each market within the culture and adapt to the languages and also change AI for

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playlist recommendations. Spotify wants everyone everywhere to feel included, on their
website it states, “We want to help shape a world that is welcoming for people of all
backgrounds and identities, that centers justice and equity in everything we do and brings
wellness and joy to all” (Social impact: Life at Spotify 2022). As more changes such as more
women’s rights, cultural representation and movements happen in the world Spotify has to
keep up with the trends and changes that happens throughout time.
Spotify With has plans to eventually expand into a new market such as, China it is
extremely hard within the music realm. Spotify continues to find more artist and continue
to expand to a more global audience. There is an issue with the artists with getting millions
of streams on their songs “musicians complain about streaming economics that can
translate millions of clicks on their songs into pennies for them” (Ovide, 2021).
Spotify has a difficult situation with the musicians that use the app for their platform
because they pay the least amount out of their competitors. It forms economically
inequality among artists within the platform. Economic factors such as active users using
the app factors such as pertains with also what is going on economically within the
subscribers that use the app and how stable to economy is. In regard to the environment

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Spotify has been labeled as not being suitable by companies like Greenspace because
there’s not any action that is shown that they care about the environment because they
have not worked to reduce the energy used by the data centers that they have “Spotify, the
dominant streaming service, needs huge quantities of energy to power its servers” (Ross &
Pearce, 2020). Spotify and the features they have on their streaming platform and more
expansion it greatly impacts the energy that they use. However, Spotify has made claims
they stated they are trying to improve how the effect the environment Spotify claims they
are “calculating all greenhouse gas (GHG) emissions connected to our business, everything
from the electricity we use and the travel we do to our entire value chain” (Climate action:
Life at Spotify 2022). Although, Spotify stated they are calculating things may not
necessarily mean they are actually doing it as of now. Spotify has made these claims, but
consumers will be looking for evidence as this becomes a greater concern socially, they will
have to make changes to keep their market.
China is a huge market that Spotify would like to reach. China could become the largest
music market in the world in the next upcoming years that would surpass even the US.
“Right now, with a population of 1.36bn (over 4x that of the USA), China is the globe’s 10th
largest music market” (Jones, Spotify and Apple Music will struggle in China. meet the reason
why... 2017). With such a huge number of people it could bring a new rate of subscribers to
the stream the music app and bring in more money. But with new territory comes new
competitors especially in China “Tencent spent big to acquire a majority stake in $2.7bn-
valued China Music Corp, taking control of two key music platforms – Kuwo and KuGou”
(Jones, Spotify and Apple Music will struggle in China. meet the reason why... 2017). With

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expansion to a new market, they have to fall into federal regulations, governmental policies
and taxation in those countries. Spotify also has to deal with regulations a politics also
within the US things going on within the world could impact the health of this streaming
service.
CONCLUSIONS
Overall, Spotify has a lot of great things going on for it as a company and a lot of areas that
it will need to grow to ace upcoming and possible threats. The greatest concern is with the
payout for it being a music streaming service it seems to put the artists on the back burner
in terms of how much they get paid. Major well known artists such as Taylor swift
removing herself and even well-known artists like prince because of the payout can
influence another artist to join along with them. Spotify’s advanced features has within the
app such as AI technology and numerous of playlist catered to someone’s personal style
and or cultures and beliefs really makes the user feel like they’re having a great
personalized experience on the app it is not limited to what device that you have. Spotify
will need to continue to work out the internet issue and service possibly in other countries
who may not benefit to have well internet service. Spotify currently is the largest streaming
service with more subscribers than its competitors but if they try to reach in the Chinese
markets they would have to compete with even bigger and well know companies such as,
Tencent. China currently has one of the largest opportunities for the music streaming
market. “Strong international growth will likely bring headwinds to Spotify's average
revenue per user (ARPU). Users in countries with lower GDP per capita will likely not pay
as much as users in Western nations” (Schafer, 2021). In the foreseeable future Spotify

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could become a huge powerhouse of the music streaming world but if it crosses into a new
territory, it could be dominated if it does not implement new strategies to continue to
grow.
RECOMMENDATIONS
Based upon research and findings, Spotify premium music will need to expand the target
market and increase payout to artists. They can do this based on how many streams an artist gets
the more the artists get stream a bigger payout could formulate while new and upcoming artists
can still make money but also use the platform to continue to grow their fan base. Spotify should
further look into moving into a new territory and expand their fan base, number of streams, and
subscribers. Before Spotify even steps foot into China they will have to implement these
strategies before going against big companies that could end up bringing down the company.
Streaming based off of WIFI is also an issue with the streaming service Spotify can come up
with deals and phone carrier services or plans that can come where it can be streamed through
data or something that can be saved when they are offline when a user is not near a good internet
service. Spotify also can get artist endorsement and consider investing in hosting a Spotify music
streaming event to further continue to get more subscribers and build revenue for the company
and with more revenue they can. Increase payout to artists and even promote newer audiences
they should implement these strategies by 2023 to early 2024. As they continue to grow, they
should continue to look at competitors and see currently what their competitors may be doing
well on that they can do better or match to continue to stay on top. Overall, as long as Spotify
does not remain stagnant and is always looking to expand and implement new ideas and expand,
I see a very profitable future to the standing of the company

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REFERENCES
Climate action: Life at Spotify. Climate Action | Life at Spotify. (2022). Retrieved March 13,
2022, from https://www.lifeatspotify.com/diversity-equity-impact/climate-action
Daniel Ek, Spotify. Music Business Worldwide. (2021, February 5). Retrieved March 6, 2022,
from https://www.musicbusinessworldwide.com/people/daniel-ek/
Jones, R. (2017, January 27). Spotify and Apple Music will struggle in China. meet the reason
why... Music Business Worldwide. Retrieved March 13, 2022, from
https://www.musicbusinessworldwide.com/spotify-and-apple-music-will-struggle-in-
china-meet-the-reason-why/
Ovide, S. (2021, March 22). Streaming saved music. artists hate it. The New York Times.
Retrieved March 13, 2022, from
https://www.nytimes.com/2021/03/22/technology/streaming-music-economics.html
Robinson, K. (2021, April 13). 15 years of Spotify: How the streaming giant has changed and
reinvented the music industry. Variety. Retrieved March 6, 2022, from
https://variety.com/2021/music/news/spotify-turns-15-how-the-streaming-giant-has-
changed-and-reinvented-the-music-industry-1234948299/
Ross, A., & Pearce, S. (2020, September 23). The hidden costs of streaming music. The New
Yorker. Retrieved March 13, 2022, from https://www.newyorker.com/culture/cultural-
comment/the-hidden-costs-of-streaming-music
Schafer, B. (2021, April 15). Where will spotify be in 5 years? The Motley Fool. Retrieved
March 13, 2022, from https://www.fool.com/investing/2021/04/15/where-will-spotify-be-
in-5-years/
Social impact: Life at Spotify. Social Impact | Life at Spotify. (2022). Retrieved March 13, 2022,
from https://www.lifeatspotify.com/diversity-equity-impact/social-impact