Would it be feasible for Spotify to develop other kinds of exclusive content, such as video?

SPOTIFY CASE ANALYSIS The Case is written in 2019; however, our focus is to bring in more content details to support the current business. To help with your critical thinking: 1. Understand the situation, from the viewpoints of the environment, competition, and the company’s corporate mission and vision statement (see additional documents posted in the Assignment on Blackboard). 2. Position alternative courses of action Case Synopsis In early 2019, Spotify announced an operating profit of $95 million for the fourth quarter of 2018. The world’s largest streaming company was approaching profitability for the first time after a decade of massive losses. Previously a staggering increase in revenue, which exceeded $5 billion at the end of 2018, had failed to get it out of the red. By the late 2010s, streaming had become the way to consume music, fueling the first global sustained growth of the music industry since the 1990s. Spotify had nearly 100 million subscribers and 200 million users overall but the company was not immune to threats. The Case jumps back to the 1990s to talk in detail about how digital formats disrupted the music industry. Several innovations changed the way people could acquire and listen to music, which caught the music industry off guard. Revenues had fallen, and it was not until the success of digital music downloads— spearheaded by Apple and at the time its iTunes stores (as you know, Apple transitioned away from iTunes early 2019 into the Apple Music app) in the first decade of the 21st century—and in particular streaming in the 2010s that the industry seemed to finally get on a path to recovery. The Case then describes Spotify’s features and its two business models: one free service where users can listen to music but are interrupted by advertisements every few tracks, and a premium service without the commercials and with several features added. Royalties were the biggest component of Spotify’s costs and depended largely on deals with the major music labels controlling the industry—deals that Spotify was able to renegotiate in 2018. The Case then sets out the threats facing Spotify, particularly the threat from large digital companies such as Apple, Amazon, and Google. Spotify was engaged in a bitter rivalry with Apple Music, which had become a success on its own. Apple CEO, Tim Cook claimed that Apple Music was already the top streaming service in the US music market and the largest in the world by revenue. Apple had announced plans to create a cultural one-stop shop that would include music, video, books and even video games. Likewise, the retail giant Amazon was already bundling music streaming with its own retail and videostreaming services, and Google was doing something similar with YouTube. It was in the landscape that Spotify announced the acquisition of several podcast publishers and creators, starting what it regarded as an audio gamble and expanding its catalog to include content unrelated to music. Podcasting was still a very small market but it was growing in popularity. Observers might ask whether Spotify could work its magic twice, growing podcasting as it had done with music. The Case concludes by asking whether this gamble can make Spotify more competitive against its growing rivals. or whether there are other strategies the company can adopt. You have been called in by the founders, Daniel Ek and Martin Lorentzon to assist with continuing to move their business model forward with their Podcast strategy. The Founders know you are not an industry expert in the music streaming industry but respects your knowledge as a marketing consultant leader. Ultimately if this meeting goes well, you will be invited to present your recommendations/analysis/argument to Board of Directors. The Founders sent the below to assist with your critical thinking and integrate into your analysis/argument. This is based on Spotify’s strategic move into nonmusic content with the Podcast Gamble. • The podcast strategy allows Spotify to differentiate itself and compete on content. The Founders strongly believe nonmusic audio content has better synergy with Spotify’s expertise and infrastructure • To increase user retention and engagement—Podcasts are episodic and are released at regular intervals. Popular podcasters have loyal audience who listen to new content as it is published. • To reach potential customers who are not interested in music streaming—but may be interested in some of the many topics covered by podcasts. In addition, the Founders are asking you to consider other alternatives, to remain competitive, grow and drive revenue, such as: • Acquisition—should they purchase several podcast creators and publishers • Should Spotify be acquired—by another company with competencies or • Partnerships—not acquired but enter into partnerships in order to improve competitive position • Encourage more focus from free to premium—If the free version is just a means to get people to go for premium, maybe the “natural” number of free users should be lower than it is now. Consider further limiting the free version’s features. • Competing on content—Spotify’s nonmusic audio gamble (growing the podcast business) is a way for the company to compete on content. Would it be feasible for Spotify to develop other kinds of exclusive content, such as video? • Geographical expansion—Spotify has started to enter emerging markets such as the Middle East and India. It has yet to enter the Chinese mainland are other markets considerations for Spotify should enter? Are there also drawbacks to geographical expansion. Spotify’s Mission Statement Spotify’s corporate mission is “to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by these creators.” In this corporate mission statement, the company declares its purpose in supporting creative work, creators’ livelihood, and worthwhile access to these creators’ works Spotify’s Vision Statement for a Cultural Platform Spotify’s corporate vision is to be “a cultural platform where professional creators can break free of their medium’s constraints and where everyone can enjoy an immersive artistic experience that enables us to empathize with each other and to feel part of a greater whole.” The company’s nature as a platform, and the metaphysical value of the music streaming business are specified in this corporate vision statement. In essence, Spotify considers itself as a promoter of international societal improvement via cultural relations.