Spotify: Disrupting the Global Music Industry

Spotify: Disrupting the Global Music Industry
Case Code: BSTR559
Case Length: 24 Pages
Period: 2006-2018
Pub Date: 2019
Teaching Note: Available
Price: Rs.500
Organization: Spotify Technology S.A
Industry: Music Industry
Countries: Sweden, United States, United Kingdom
Themes: Business Model, Innovation
Spotify: Disrupting the Global Music Industry
Abstract Case Intro 1 Case Intro 2 Excerpts


The Idea for Spotify and it's Business Model

Daniel was a music and technology enthusiast. He began his first venture in 1997 at the age of 14 when he started a business of creating websites for different customers from his home. He worked for several web-based companies before founding Advertigo, an online marketing firm that he sold in 2006 to Tradedoubler. He held leadership roles at some companies including e-commerce platform Tradera, which was later sold to eBay Inc., and as Chief Technology Officer (CTO) at fashion-related online gaming company Stardoll. Lorentzon served as a member of the Board of Directors of Telia Company AB. Later, he co-founded TradeDoubler in 1999...

Spotify - Leverging Social Media for Growth

Analysts felt that Spotify was able to multiply the number of its users due to its association with various social media websites. Spotify connected with its users on social media websites such as Facebook and Twitter to understand their preferences and to get feedback about its music streaming services, so that it could improve them...

Why Spotify was Believed to be a Disruptive Business Model

Analysts felt that Spotify had disrupted the old business models in the music industry in nearly the same way as Napster had done, the only change being that Spotify had done it legally. Industry observers opined that Spotify had leveraged the desire of Generation Y.....

The Other Side

Despite being credited with altering the global music industry landscape, Spotify came under heavy criticism for its Freemium model, wherein the songs were available for free to users. In July 2013, ..

The Growth of Spotify

By 2017, Spotify was operating in 61 countries. In the music streaming space, the performance of a company was measured in terms of the number of MAUs (Refer to Exhibit IX). By 2017, Spotify had 159 million MAUs, out of which 71 million were premium or paid subscribers ..

Going for Disruption Again

Spotify went in for a non-traditional IPO on The New York Stock Exchange (NYSE) on April 3, 2018. Unlike other companies, it opted for 'direct listing' or 'Direct Public Offering' (DPO). In a DPO, a business raised capital by selling shares of stock directly to employees, customers, suppliers, and professional or individual investors...

Looking Ahead

Despite the rapid growth in the number of its users and revenue, Spotify had not managed to make a profit from the time it was incorporated. For the year ending December 2017, it recorded revenue of US$ 4.99 billion, up 38% from 2016. It had an operating loss of US$ 461 million, up from a US$ 426 million loss in 2016...


Exhibit I: Details of Music Companies
Exhibit II: Spotify Total Monthly Active Users (MAUs) - 2018
Exhibit III: Details of Music Companies
Exhibit IV: Spotify Subscription Model in the US
Exhibit V: Information on Spotify's Various Investors, Over the Years
Exhibit VI: The Changes Driving the Global Music Industry
Exhibit VII: Spotify Royalty System
Exhibit VIII: Growth of Global Recorded Music Revenues
Exhibit IX: Spotify's MAUs Region-wise in Millions
Exhibit X: Key Performance Indicators (KPI) of Spotify
Exhibit XI: Spotify's MAUs by Region as of 2017
Exhibit XII: Spotify Vs. Competitors
Exhibit XIII: Spotify's Gross Margins Rise in 2017
Exhibit XIV: Consolidated Financial Statement of Spotify Technology S.A
Exhibit XV: Spotify's Premium Churn
Exhibit XVI: Spotify's Paying Users Evolution in Millions, across the World

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