This is a Full Sail University Project

1. 5/11/2022 General Economics
SPOTIFY
CAMRYN SALINAS
NATALIA GUZMAN
ROCÍO GUZMÁN PÉREZ
Full Sail University
ECO2005

2. SPOTIFY’S MARKET
• Spotify was created on April 23, 2006, in Stockholm Sweden. The founders of the company are Daniel Ek and Martin Lorentzon.
Currently, Daniel Ek is still the CEO of the company.
• Spotify is a streaming services platform, and it has become one of the biggest streaming providers over the years. This is seen by the 422
million monthly active users' and 182 million paying subscribers.
• It offers digital copyright-restricted recorder music, podcasts, and videos.
• They include over 82 million songs from reordered labels and media companies.
• Spotify is available in 180+ countries

3. Competitors and Prices
•If the consumer is subscribing to Spotify Premium, they pay a fee of $9.99
a month.
•Apple Music: $9.99
•Amazon Music $8.99
•YouTube Music: $9.99
•SoundCloud: Free
What do they Offer?
•Spotify Premium let listeners download songs, ad-free music, choose any song to listen to,
and unlimited skips.
• Benefits ad-free music, original shows, concerts, exclusive interviews, live and on-demand
radio.
•For a monthly subscription of $79/year in Amazon Prime= Unlimited access to songs and
podcasts ad-free.
•Music and videos without ads, being able to hear music even if the app is not open,
availability of audio-only mode to listen to music without loading a music video.
•Allows to upload the hours of audio content and access to stats like the number of track plays
and likes.
COMPETITORS

5. https://www.statista.com/statistics/81371
3/spotify-revenue/

6. FACTORS AFFECTING
DEMANDS
CUSTOMERS INCOME- SPOTIFY OFFERS A MULTITUDE OF DIFFERENT DISCOUNTS TO HELP AID THE PURCHASE FOR THEIR USERS. THESE DISCOUNTS INCLUDE
THE STUDENT PLAN OPTION, WHICH KNOCKS DOWN THE PRICE OF THEIR ORIGINAL PREMIUM PLAN OF $9.99 TO $4.99. CONNECTING ADDITIONAL SERVICES IN
PACKAGE
PLANS LIKE THE SERVICE HULU, IS ANOTHER BENEFIT OF USING SPOTIFY. LASTLY, SPOTIFY GIVES USERS THE OPTION TO START A 3 MONTH FREE TRIAL TO
TEST OUT
THEIR SERVICES BEFORE OFFICIALLY MAKING YOUR DECISION TO PURCHASE.
PRICE OF RELATED GOODS- IF SPOTIFYS CUSTOMERS INCOME RISES, THEN THE MORE THEY WILL DEMAND. IF INCOME INCREASES, THEN CUSTOMERS CAN
MORE
THAN AFFORD THE PREMIUM PLAN. IF CUSTOMERS INCOME FALLS, THEN DEMAND DECREASES AND THEREFORE PRICES WILL HAVE TO DECREASE AS WELL.

7. EXPECTATION IN THE
MARKET
SPOTIFY HAS INCREASED LISTENERS AND USERS NOT ONLY BY THEIR INNOVATIVE STYLES, BUT THE CONTENT THEY PROVIDE ON THE
PLATFORM AS WELL. RESEARCH SHOWS VISUAL STIMULATION CAN BE EXHAUSTING AT TIMES, AND SIMPLY LISTENING CAN BE MORE
EASING. SPOTIFY IS NOT JUST A MUSIC STREAMING PLATFORM, BUT ALSO INCORPORATES PODCASTS AND AUDIO ADVERTISEMENTS.
SPOTIFYS STUDY SHOWS THAT 70% OF LISTENERS STREAMING AUDIO, ARE MORE LIKELY TO REMEMBER WHAT THEY HEAR.
AS WE LOOK AHEAD INTO SPOTIFYS FUTURE, WE SEE THE POSSIBILITY OF SPOTIFY TURNING A PROFIT FOR SHAREHOLDERS.
SPOTIFY IS ONE OF THE TOP AUDIO STREAMING SERVICES IN THE INDUSTRY, AND LOOKS LIKE IT SHOULD BEGIN RECEIVING
PROFITS IN 2022. THERE ARE MANY POSSIBLE DIRECTIONS SPOTIFY COULD LEAD IN TO, THE FIRST INCLUDES INCREASING THEIR
OVERAGE REVENUE PER USER. NEXT, COULD BE BROADENING ITS PRESENCE GLOBALLY WHILE STILL BEATING COMPETITORS.

8. NUMBER OF BUYERS AND
ELASTICITY
SPOTIFY REMAINS THE TOP AUDIO STREAMING SERVICE WITH ITS UNIQUENESS AND THE AMITY TO CATER THE NEEDS OF ITS USERS. ONE DOWNFALL
OF SPOTIFYS SERVICES, IS ITS RELATIONSHIP TO ITS ARTISTS. COMPETITOR SERVICES MAY TAKE THE REINS HERE BECAUSE OTHER SERVICES SUCH
AS THE SERVICE ‘TIDAL’, HELP THE ARTISTS ON THEIR PLATFORM GENERATE MORE REVENUE FROM THEIR MUSIC. SPOTIFYS MAIN PRIORITY IS IT’S
LISTENERS, BUT MAY NEED TO BOOST THEIR PRIORITY FOR THEIR ARTISTS TOO.
SPOTIFY COSTS $9.99/MONTH FOR THE PREMIUM PACKAGE, $4.99/MONTH FOR STUDENT USERS, AND $14.99 FOR THE FAMILY PLAN. SPOTIFY IS WELL
KNOWN, AND IS ONE OF THE TOP AUDIO SERVICES OUT THERE, SO IT’S CUSTOMERS ARE LOYAL AND THEY LIKE WHAT THEY GET FOR HOW MUCH THEY
GET IT FOR. SPOTIFYS DEMAND CAN BE VERY MUCH ELASTIC, SO IF PRICES GO UP, SO WILL COMPETITORS, BUT CUSTOMERS WILL STAY WITH SPOTIFY.
IF PRICES DECREASE, THE DEMAND FOR OTHER SERVICES WILL DECREASE BECAUSE CUSTOMERS WILL GO TO SPOTIFY.

9. FACTORS AFFECTING
SUPPLY
A. Because Spotify currently deals with independent artists, it doesn’t seem like the supply would be affected or even change in price. The
platform was created to be used in a manner in which you can earn passive income for your art. However, several things could affect supply like:
the artists demanding more pay, a giant boycott, cancel culture or even scarcity of musicians, which is highly unlikely. A good example is the
article “Musicians Say Streaming Doesn’t Pay. Can the Industry Change?” By The NY Post. (Sisario, B. 2021)
B. While we can assume that Spotify’s supply is the music and streaming entertainment, a lot of the income comes from subscriptions, ads and
memberships. Most people pay to have access to their 35 million song library. These have been some of the technological features that have
made the company popular but another big thing that they are adding on as an evolutionary advance, is the integration of podcasts. (Henderson,
2021)
C. Spotify expected to report 418 million monthly active users by the first quarter of 2022. Prior to that data analysts reported predictions of
approximately 417.8 million users, according to StreetAccount. On top of that they are expecting to report 183 million total premium subscribers.
(Jbursz, 2022) Fortunately for them this means a lot of money coming in and barely any invested back on talent. Only 30% of the company’s
income goes back to artists, licensing and music deals. (Johnston, 2022)

10. FACTORS AFFECTING
SUPPLY
D. The online music streaming industry is extremely competitive and every day it gets a little more difficult to stand out. Spotify’s direct
competition would be Apple Music, Amazon Music, Google Play Music, Pandora, YouTube Music, Tencent, Vevo, and Deezer. So, this is
not something you can measure how long would it take for new competitors to enter the market because they already exist. But, if the goal
was to wipe them out completely or have the competition back down they are going to need something that makes them different. They’re
already trying to do that with the new integration of live events. (BBC,2022)
E. According to the data.census.gov website, Spotify has no locations in the US. (Bureau, 2022) But online Spotify says they have 4
location in New York at the financial district. (New York Life, 2022)
F. Unlike many other businesses, the COVID-19 pandemic impacted Spotify in a positive manner. Spotify has come out publicly and
expressed how the fact that people have been staying at home has increased their music streams and podcasts. Some may use it as
background music while cleaning and others have adapted into listening to podcast to stay informed. A lot of these podcasts that Spotify
used were also used to deliver COVID-19 News. Technically, Spotify helped out.

11. REFERENCES
BBC. (n.d.). How spotify came to be worth billions. BBC News. Retrieved May 11, 2022, from https://www.bbc.com/news/newsbeat-43240886.amp
Bureau, U. S. C. (n.d.). Explore census data. Retrieved May 15, 2022, from https://data.census.gov/cedsci/map?q=Spotify+&cid=H074001&vintage=2020&mode=thematic&loc=-
47.4075%2C146.8616%2Cz5.5052
Henderson, R. (2021, January 16). How Spotify now owns the podcast Supply Chain. The Motley Fool. Retrieved May 11, 2022, from https://www.fool.com/investing/2021/01/16/the-2-big-reasons-
spotify-will-win-podcasting/
Jbursz. (2022, February 3). Spotify stock plunges on middling user growth projections. CNBC. Retrieved May 15, 2022, from https://www.cnbc.com/2022/02/02/spotify-stock-plunges-on-middling-
user-growth-projections.html
Johnston, M. (2019). How Does Spotify Make Money? [online] https://www.investopedia.com/articles/investing/120314/spotify-makes-internet-music-make-money.asp
Laker, B. (2020, October 28). The Economics Of Music Streaming And The Role Of Music Streaming Platforms. [online] https://www.forbes.com/sites/benjaminlaker/2020/10/28/heres-how-
lockdown-has-shown-that-spotify-has-a-sustainability-problem/?sh=b068b78599b5
Johnston, M. (2022, March 30). How Spotify makes money: Premium Service generates the biggest share of revenue. Investopedia. Retrieved May 11, 2022, from
https://www.investopedia.com/articles/investing/120314/spotify-makes-internet-music-make-money.asp
New York: Life at Spotify. New York | Life at Spotify. (n.d.). Retrieved May 15, 2022, from https://www.lifeatspotify.com/locations/new-york
Sisario, B. (2021, May 7). Musicians say streaming doesn't pay. can the industry change? The New York Times. Retrieved May 15, 2022, from
https://www.nytimes.com/2021/05/07/arts/music/streaming-music-payments.html

12. REFERENCES
PROPHET. (2016, JULY 22). THE KEY TO SPOTIFY'S BRAND RELEVANCE: THEY'RE CUSTOMER-OBSESSED. MEDIUM. RETRIEVED MAY 15, 2022, FROM
HTTPS://MEDIUM.COM/@PROPHETBRAND/THE-KEY-TO-SPOTIFYS-BRAND-RELEVANCE-THEY-RE-CUSTOMER-OBSESSED-99C3D8F7FE78
SILBERLING, A. (2022, JANUARY 24). SPOTIFY STILL TOPS OTHER MUSIC SERVICES, BUT ITS MARKET SHARE DECLINED. TECHCRUNCH. RETRIEVED MAY 15, 2022, FROM
HTTPS://TECHCRUNCH.COM/2022/01/20/SPOTIFY-SUBSCRIPTION-NUMBERS-UP-YOUTUBE-MUSIC-TIDAL/
5 TRENDS TO WATCH (AND LISTEN) FOR IN 2020: SPOTIFY ADVERTISING. 5 TRENDS TO WATCH (AND LISTEN) FOR IN 2020 | SPOTIFY ADVERTISING. (N.D.). RETRIEVED MAY 15, 2022, FROM
HTTPS://ADS.SPOTIFY.COM/EN-US/NEWS-AND-INSIGHTS/5-TRENDS-TO-WATCH-AND-LISTEN-FOR-IN-2020/
FORECAST SAYS SPOTIFY TO OVERTAKE APPLE IN PODCAST AUDIENCE SIZE. MARKETING CHARTS. (2021, MARCH 31). RETRIEVED MAY 15, 2022, FROM
HTTPS://WWW.MARKETINGCHARTS.COM/INDUSTRIES/MEDIA-AND-ENTERTAINMENT-116571
SHOHAPPY, P. BY. (2019, JANUARY 9). SPOTIFY VS. OTHER MUSIC APPS: PRICE ELASTICITY. ECONOMIC CORNER. RETRIEVED MAY 15, 2022, FROM
HTTPS://THINKLIKEECONOMIST.WORDPRESS.COM/2018/10/28/SPOTIFY-VS-OTHER-MUSIC-APPS-PRICE-ELASTICITY/