Spotify Business Model – Business Model Analyst
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Spotify Business Model – Business Model Analyst

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The Spotify Business Model operates worldwide as an audio streaming and media services provider that gives its users access to millions of music, podcasts, and videos uploaded on the platform by artists and other content creators. Spotify is one of the largest music providers with millions of active users and subscribers all over the world.
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Spotify was founded on 23rd April 2006 in Stockholm, Sweden, by a Swedish billionaire entrepreneur and technologist, Daniel Ek, and his partner, the cofounder of Tradedoubler, Martin Lorentzon. Spotify was created to help deal with the problem of music piracy, which used to cost the music industry millions every year. The name, Spotify, is a portmanteau of the words “spot” and “identify”. 
Although Spotify was founded in 2006, it did not launch until two years later. Spotify was launched on 7th October 2008 and its services were only available by invitation only to a few European countries such as the United Kingdom, Spain, Sweden, France, Norway, and Finland. In February 2009, Spotify released its free service for public registration in the United Kingdom, however, it had to halt this service because of the large number of registrations following the release of a mobile application.
In July 2011, Spotify was launched in the United States market, and it started to compete with other big music streaming services. Since then, Spotify has expanded its operations in the United States and its U.S. headquarters is located in New York City. Currently, Spotify operates in over 180 countries and has over 400 million subscribers.
Spotify is still primarily owned by its founders, Daniel Ek and Martin Lorentzon. While there are shareholders who own stakes in the company, the founders still retain the highest amount of shares. Daniel Ek, who is also the chief executive officer of the company, owns 16.7% (32,323,633) of the total ordinary shares and possesses 31.9% of the voting power. Cofounder Martin Lorentz, on the other hand, owns 10.9% (20,988,551) of the total ordinary shares and possesses 42.9% of the voting power. 
Some other key shareholders of the Spotify company include Baillie Gifford & Co., Morgan Stanley, T. Rowe, Price, and Tencent. Other shareholders include Alecta Pension Insurance Mutual, BlackRock Fund Advisors, Ark Investment Management LLC, AMF Fonder AB, Jenison Associates LLC, etc.
“To unlock the potentials of human creativity”.
Spotify operates a freemium business model. This means that some of its services can be accessed for free, while some of its services are considered premium and can only be accessed when paid for. Spotify generates its revenue from its users who are either using the free service or subscribed to the premium service.
Spotify offers its audio-streaming services for free to its users. Such users have limited access to a catalog of millions of songs, however, some features are restricted for these users. Also, free users are shown advertisements that serve as a source of revenue and compensation for the free services offered by Spotify. Advertisers on Spotify are brands, agencies, and institutions that pay Spotify to showcase their products and service to the vast audience that uses the music-streaming app. This way, Spotify generates revenue by showing paid ads to its free users in exchange for the services offered.
This is the biggest source of revenue for Spotify. While some of Spotify’s services can be accessed freely, users still need to pay a monthly subscription fee to unlock all the features of the music-streaming service. Spotify’s users who pay for full access to Spotify’s services are known as premium subscribers. There are different plans available for the Spotify premium subscription, with varying prices for different categories. These include individual, duo, family, and student plans. Any premium subscriber who pays for any of these plans is granted unlimited access to Spotify’s catalog of music and podcasts, both online and offline (after download). 
Also, ads are eradicated for premium subscribers, and they have the best experience listening to music without interruption from advertisements. As of the second quarter of 2022, Spotify had 188 million premium subscribers worldwide, and Spotify will continue to generate revenue from premium subscriptions as long as its subscribers renew their subscription plans every month.
The Spotify Business Model can be explained with the business model canvas below:
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Spotify operates in over 180 million countries, therefore it has customers all over the world. Spotify’s customer segment consists of the following:
Spotify provides value for every member of its customer segment. Spotify’s value propositions consist of:
Spotify’s users are the exclusive audience of Spotify. They make up the largest part of its customer segment. The following are Spotify’s value propositions to its users:
Content creators on Spotify are the creatives who put out original content on the Spotify platform. Spotify’s value propositions to its content creators includes:
Spotify has an ads studio available for advertisers to help them reach millions of people. The following are Spotify’s value propositions to its advertisers:
Spotify’s channels consist of:
Spotify’s customer relationships consist of:
Spotify operates a freemium business model. However, it still manages to generate revenue from two major sources. Spotify’s revenue streams consist of:
Spotify’s key resources consist of:
Spotify’s key activities consist of:
Spotify has partnered with some important individuals and corporations to ensure effective operations and value delivery. Spotify’s key partners include:
Spotify’s cost structure consists of:
Spotify is one of the largest music-streaming services in the world, however, it is not without its competitors. Spotify’s competitors include:
Below, there is a detailed SWOT analysis of Spotify:
Spotify operates a freemium business model that aims to put an end to music piracy by providing legal music streaming services to people at little to no cost at all. Through its services, Spotify saves the music industry millions of dollars. Despite the ever-increasing number of competitors, Spotify remains one of the largest audio-streaming service providers. However, Spotify needs to explore new markets and products to stay above its competitors.


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