This is a student analysis report completed on Spotify.

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A Market Analysis for
Spotify
Denarious Britt
Full Sail University
Project & Portfolio II: Business and Marketing
9/27/20

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EXECUTIVE SUMMARY
This is a market analysis report detailing the current status and future outlook for the
music streaming service Spotify. The report has an overview of the company and financial
details specific to the company’s financial standing upon completion of Q2. The report provides
information relevant to the company’s record-breaking monthly subscribers and briefly details
the company’s new partnership with Universal Music Group. The report includes
recommendations on how the company can remain the number one music streaming service by
introducing “Stans Corner” to increase artist and fan engagement.

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OBJECTIVE
With close competitor Apple Inc. closing in on Spotify this report details how Spotify can
remain the number one streaming service in the world, by introducing “Stans Corner” via
Spotify.
RESEARCH METHODOLOGY
The information gathered for this report is mostly external, secondary sourced from the
internet and online databases and was gathered during the month of September 2020. The
financial information gathered for this report was current the day it was sourced.
RESEARCH AND KEY FINDINGS
Spotify is a music streaming service for individuals who enjoy music, podcast,
representation, and the feeling that they are appreciated. Spotify is a trendsetting
streaming platform that provides creators a safe space to share their art with their fans.
With curated playlist based on fans’ musical personalities, representation of songwriters,
and hundreds of podcasts, Spotify’s subscribers are guaranteed an experience like no other
created with them in mind.
In 2006, Spotify was founded in Stockholm, Sweden, by Daniel Ek and Martin
Lorentzon. Spotify started as a small start-up and was developed as a response to the
growing piracy problem the music industry was facing (BBC, 2018). Spotify was officially
launched in 2008 with limited sign-up for free on an invite-only basis, later, paid subscriptions
were made available to the public. Despite its initial difficulties and large monetary investment,

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Spotify is a prime example of a proposition simplifier that took over a major Market”
(Entrepreneur, 2017).
Financially, this company is in great standings. Despite the uncertainty of COVID-19 and
the global economic impact that it’s had and continues to have, total revenue for Spotify grew
13% Y/Y Q2. While the company did record a loss of ad-supported revenue of 21% Y/Y in Q2 it
was still above the expectations set for Q2. Spotify finished with a gross margin of 25.4% in Q2
which exceeded expectations and finished above the high end of the company’s guidance range
(Business Wire, 2020).
At the end of Q2’20 Spotify achieved
a record 138 million Premium Subscribers
globally up 27% Y/Y (Business Wire, 2020).
The Premium Family plan subscription
continues to be the dominant driving force,
as in Q2 Spotify expanded the plan offering
it to new geographies. The multiuser plan is now available in 90+ territories globally.
While streaming services continue to grow and become the number one source for
access to music benefiting record labels and performers it still hasn’t been great for all.
Composers of music still are fighting to be paid a fair share for their contribution to the top 40
hits. To ensure that a great relationship remains between Spotify and the music artist the
company has announced a multi-year global license agreement with the world’s largest music
company, Universal Music Group. This partnership aligns with the company’s efforts to foster
Spotify Premium Logo

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groundbreaking new features providing more recognition and value to artists and experiences
like no other for music lovers (Forbes, 2020).
CONCLUSIONS
Spotify is currently holding well against its competitors, however, with its biggest
rival Apple Inc. recording an increase of 36%
subscribers to their music streaming service
Apple Music in 2019, this company must act
fast (Apple Insider, 2020). Establishing a new
partnership with Universal Music Group to
create more artists and fan personal
engagement is a step in the right direction for the company. With competitor Apple Music
revamping their platform in their new IOS 14 update and focusing on pushing the
boundaries of digital radio with their new Apple Music 1 station, and now leaning heavily
on listener algorithms they have shifted their platform to be more user-friendly (Techradar
2020). Seeing as though Apple Music already has a leg up on Spotify being that the platform
comes preloaded on Apple Inc. devices making them the default choice with most
subscribers. Spotify must now look towards technology even more now than ever before to
develop its platform in a way that cannot be matched by its competitors.
Apple Music Logo

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RECOMMENDATIONS
Based on the research findings and conclusions, Spotify must find a way to push the
boundaries of their technology and increase customer satisfaction to ensure that they remain the
number one music streaming platform. Spotify can do this by introducing “Stans Corner”, which
would be a new feature added to their music streaming service to create a better artist-fan
relationship. Each artist would have their own page dedicated to them and their fans where they
could make exclusive announcements, premiere new music, early access to the artist content, and
perform live for their fans. This new feature would be of no extra cost to fans and would in turn
ensure that Spotify retains its monthly subscribers and gain subscribers from other platforms that
don’t offer this exclusive feature.
Spotify’s recent partnership with Universal Music Group could help tremendously in
pushing this new feature. With artists like Taylor
Swift, Lady Gaga, and Adele signed to their label
they have access to the influence needed to push this
new project. With that being said Spotify needs to
begin working on the technological advances
needed to ensure that this new feature interfaces
well with the current platform and have the initial
research complete by January 31, 2021. Spotify also
needs to begin working with Universal Music
Group and its top artist on the legalities and what exactly would be required of the artist and have
reached some agreement within the next 6 months.
Lady Gaga by Norbert Schoerner, 2020

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REFERENCES
Cite your sources. Use APA short form in the body of the paper and long form in this section.
For this section, use a hanging indent shown here, with the second and subsequent lines
of each source starting ½ inch from the left margin (Format/Paragraph/Indents/Hanging).
BBC. (2018, March 1). How Spotify came to be worth billions. Retrieved from
https://www.bbc.com/news /ne ws beat-43240886
Business Wire. (2020, July 29). Spotify Technology S.A. Announces Financial Results for
Second Quarter 2020. Retrieved September 06, 2020, from
https://www.businesswire.com/news/home/20200729005266/en/
Koch, R. (2017, January 17). The Secret to Spotify's Success. Retrieved September 27, 2020,
from https://www.entrepreneur.com/article/286778
Peterson, M. (2020, April 04). Apple Music subscriber base grew 36% in 2019, second only to
Spotify. Retrieved September 27, 2020, from
https://appleinsider.com/articles/20/04/04/apple-music-subscriber-base-grew-36-in-2019-
second-only-to-spotify
TechRadar. (2020, August 18). Apple Music review. Retrieved September 27, 2020, from
https://www.techradar.com/reviews/pc-mac/software/audio-software/apple-music-
1298115/review
Zarczynski, A. (2020, July 23). Spotify's New Universal Music Group Deal Drives Deeper
Artist-Fan Engagement. Retrieved September 27, 2020, from
https://www.forbes.com/sites/andreazarczynski/2020/07/22/spotifys-new-universal-
music-group-deal-drives-deeper-artist-fan-engagement/

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