Spotify conducted an environmental analysis using STEEPLE and SWOT frameworks. The analysis found that while Spotify has many subscribers and a large music catalog, it pays low royalties to artists. Spotify also faces threats from competition and potential loss of music if royalty issues are not addressed. Opportunities exist in expanding services like video and improving the podcast platform. Overall, Spotify caters well to consumers but must improve support for music owners.

1. Page 1
An Environmental Analysis for
Spotify Ltd.
Amanda Darling
Full Sail University
Project & Portfolio II: Business and Marketing
December 3, 2021

2. Page 2
The STEEPLE Analysis
SOCIOLOGICAL:
The demographics at Spotify mainly consist of millennials and generation z with the age range
of 18-34. These individuals highly indulge in pop culture. Females take over these services at
56%, with males at 44% (Business of Apps, 2021). These individuals are usually students,
those starting their career with entry or mid-level experience. They tend to enjoy the fads and
trends of the entertainment industry and are very musically inclined.
TECHNOLOGICAL:
If you have any smart device, you can most likely listen to Spotify and download their
application to stream any of the 50 million songs they have available in their catalog. This
includes listening to their service on your cellphone, computer, smartwatch, tablet, or on other
smart devices such as your television or Alexa, for example. With the purchase of one of their
many subscriptions, you can also listen to music offline and ad-free. They also include
interactive data to personalize your playlist, including a yearly wrap-up of your favorite songs,
artists, and genres that you listened to throughout that year.
Haupt and Shelly (2012) empathize this by stating that “Spotify excels at user control, device
syncing, and speed. Unlike Internet radio, Spotify subscribers really can listen to whatever they
want to (if it is in the catalog), whenever they want to. With various mobile devices, a Spotify
subscriber can not only listen to tracks but also make Spotify tracks available offline and
combine them in playlists with their music purchased elsewhere” (p. 135). Spotify continuously
looks to break the technological barrier to keep up with the newest standards and consumer
needs.
ECONOMIC:
With Spotify holding the most subscribers in the music streaming service industry, they currently
own one of the top spots financial within this industry. “The streaming service not only holds a
monopoly over other streaming mammoths but also over the different ways to listen to music”
(Laker, 2020). However, when it comes to financial payouts to the artist for song streaming, they
seem to be ridiculed. “Industry estimates put Spotify’s payout rate for recordings at about
$4,000 per million streams or less than half a cent per stream. Since that money may pass
through a record company before making its way to an artist, hundreds of millions of streams
may be needed for a musician to net anything substantial” (Sisario, 2021). Many artists have
removed their music from Spotify and demanded a higher payout because they have declared
that they can barely profit from music streaming. This indicates that Spotify is beneficial to the
consumer but not the musician or music owner.
ECOLOGICAL:
Spotify promotes being a part of climate action by being part of the solution. Even though they
are a digital world, they still encourage climate change on their blog and podcasts. They have a
playlist named “Your Guide to Climate Solutions” and an original podcast titled “How to Save a
Planet”. Spotify is trying to raise awareness on its platform regarding climate action. (Life at
Spotify)

3. Page 3
POLITICAL:
At the end of 2019, Spotify banned their political ads for the U.S presidential race and any race
moving forward through their ad-supported service. With past companies like Facebook not
checking their information before posting, many digital listeners are skeptical of news
transmitted or prone to advertising fake news. It has made Spotify and many other online
services mistrust the advertisements they promote. "Spotify ran such ads in the first place is a
distortion of the very process by which Americans elect a president" (Luca, 2020), which can
negatively affect the company.
LEGAL:
Many lawsuits have been filed against Spotify, but one that was recently settled was a legal
case with Sosa Entertainment and its founder. “Sosa alleged that it had not received full
royalties associated with over 550 million streams on Spotify. In addition, the company claimed
that SPOT removed the tracks linked to said streams” (Stassen, 2021). Spotify countersued
sued Sosa Ent by alleging that the company used third parties to create millions of Spotify
accounts to continuously stream music from Sosa Ent. Ultimately the case was dismissed.
ETHICAL:
Spotify promotes implementing a diverse culture and creating equality for all. They state, “We
recognize that a one-size-fits-all approach does not, in reality, create a fairer system and that
different tactics are sometimes needed to support different groups” (Life at Spotify). In addition,
they also stated they have tried to eliminate racial inequality and injustice by supporting the
black and brown community. They have made donations and created fundraisers to support this
while also promoting artists within this community by curating playlists like Rap Caviar and other
promotional ads on their social media accounts.

4. Page 4
The SWOT Analysis
HELPFUL HARMFUL
INTERNAL
STRENGTHS
1. Spotify offers ad service along with
three different subscription services which
consumers can choose from that are ad-
free and can be played offline. Most
streaming services require a paid
subscription to use the services where
Spotify does not. This makes them stand
out.
2. Spotify has the most subscribers in any
music streaming service to date. This
shows that Spotify is one of the top
streaming services in comparison its
competitors.
3. They have an extensive music catalog
with over 50 million songs and thousands
of podcase which is continuously growing.
This gives them the ability to stand out
from other competitors and make
consumers gear more towards their
services. It also shows they are in
inclusive service.
WEAKNESSES
1. Spotify pays low royalty rates to its
artist compared to any other music
streaming service. They only pay
$0.00437 per stream compared to Apple
music who pays $0.00783 per stream.
Music owners will more than likely prefer
to have their music streamed on Apple
Music than Spotify.
2. They have similar services compared to
other streaming services in the market.
Apple Music and Amazon Music also have
a big music catalog so Spotify must make
their brand standout to consumers on why
they should go with their platform
compared to the others.
3. Only subscribers can utilize offline
services which forces consumers to
purchase a subscription if they want this
service. Even if you have a subscription,
you must first download the music you
want through an internet connection to
listen to it offline. This does not give good
promotion of their offline feature.

5. Page 5
EXTERNAL
OPPORTUNITIES
1. Spotify can improve its platform
services by including video streaming
services. This would expand their services
and app on a whole different level. In
addition, it would also help differentiate
their brand and make them stand out from
other streaming services.
2. They can do more to enhance and
promote their podcast service. Many only
refer to Spotify as a music streaming app
and it’s not until they stumble across the
app or hear from word of mouth that they
also have podcast available as well. This
may improve their subscribers and overall
service.
3. Spotify is not available in every country
and is mainly promoted in the Americas
and Europe. Though it is available in over
150 countries, there are over 50 countries
that do not have access to Spotify. If they
expanded their international growth, this
would exploit their brand reputation.
THREATS
1. They are in a very competitive market.
They must compete with some big names
name like Apple Music, and YouTube
Music and smaller ones like Pandora, and
SoundCloud. Because the market is highly
competitive, they must work harder to
keep up with the latest technology and
trends to stay relevant. Due to the high
level of competition, consumers study
which product they want to go to before
deciding on Spotify.
2. Artist have called Spotify out for their
low royalty payment. Some big-time artists
like Taylor Swift, Prince and Radiohead
have canceled their licensing agreements
with the service. This can give a bad
impression to many new artists coming on
and questioning if they should even work
with the streaming company to begin with.
3. They had legal issues from artist and
small labels due to payment and royalty
issues. This is another bad representation
on the company. This has created
criticism within the service provided to
music owners.

6. Page 6
Conclusions:
Within my findings, I determined that although Spotify is a successful company, they have a lot
of growth opportunity. The platform has high potential to be one of the top streaming services,
but they need to improve when it comes to payouts to music owners and technology factors that
could benefit them in the long run. If you review their subscription cost, compared to Apple
Music, you will see that their premium cost is basically in line with the price and demand of
consumer needs. However, when it correlates to their payment per stream, music owners and
artists tend to get the short end of the stick with Spotify. In recent years, due to the backlash,
Spotify has come out with ‘Loud and Clear’, which is “meant to provide detail about its payment
structure and respond to musicians’ calls for transparency” (Sisario, 2021). However, Apple
Music seems to have much more level in the artist payout field and giving Spotify backlash on
their end.
Spotify does exceptionally well to cater to its target market and the culture. They do a great job
of making sure they accommodate consumer needs, whether keeping up with the latest fads
and trends within the music industry. Increased consumer needs are being met with updated
playlists and innovative data analysis like their yearly wrapped up (Metz, 2021). Not only does
this cater to their target market, but it makes their brand reputation stand out, which is why
Spotify’s brand presence is highly known. They are not only a music streaming service but a
general streaming service that includes podcasts and audiobooks. That alone makes them
stand out from their competitors because it shows they can come out with exclusive technology
and different methods to interact with their subscribers.

7. Page 7
References:
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impact/climate-action
Gaille, B. (2021, January 5). Spotify SWOT analysis for 2021: 26 strengths and weaknesses.
BrandonGaille.Com. https://brandongaille.com/spotify-swot-analysis/
Haupt, J., & Shelley, A. (2012). Spotify. Notes,69(1), 132–138. https://search-ebscohost-
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Ingham, T. (2016, February 8). Apple Music is now available in 59 countries that Spotify is not. Music
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countries-that-spotify-isnt/
Laker, B. (2020, October 30). The economics of music streaming and the role of music streaming
platforms. Forbes. https://www.forbes.com/sites/benjaminlaker/2020/10/28/heres-how-lockdown-
has-shown-that-spotify-has-a-sustainability-problem/?sh=4637160a599b
Luca, C. (2020, January 4). As Spotify cancels political ads,researcherssee correlation with critical
thinking | arts | the Harvard crimson.The Harvard Crimson.
https://www.thecrimson.com/article/2020/1/4/spotify-suspends-political-advertising/
RachelMetz, CNN Business. (2021, December 2). Spotify Wrapped shows how our personal data gets
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Racial equity | life at Spotify. (n.d.). Life at Spotify. https://www.lifeatspotify.com/diversity-equity-
impact/racial-equity
Sisario, B. (2021, May 10). Musicians say streaming doesn’t pay. Can the industry change? The New
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Spotify Revenue and Usage Statistics (2021). (2021, November 11). Business of Apps.
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Stassen,M. (2021, March 25). Spotify settleslawsuit with pro music rights founderwho sought over $1bn
in damages (update).Music Business Worldwide.
https://www.musicbusinessworldwide.com/spotify-settles-with-pro-music-rights-founder-who-
sought-over-1bn-in-damages/