How Spotify Transformed the Music Industry: Case Study Analysis
The music industry, since time immemorial, has had a far-reaching impact on the social, economic, and political lives of people as individuals and as a community. The music industry in the modern age is popularly regarded as a creative and artistic industry. This term, however, does not reflect the wide network and collaboration necessary for the successful end product. These networks may involve individuals or companies that include financiers, promoters, brokers, collectors, producers, record labels, publishers, revenue distributors, composers, and finally the artist. The products in this sector are mainly music-related merchandise that conveys an artist’s or composer’s creation or compositions (Alvarez, 2017). These products include audio and video formats such as mp3 files, videos, and compact discs, and music concert memorabilia such as posters and clothing featuring the recording artist.
Working on complex business or industry case studies? Our business studies homework assistance connects you with expert support for essays, assignments, and case study analysis. Whether it’s the music industry, disruptive innovation, or business strategy evaluations, we provide well-researched and professionally written work that helps you achieve academic success while saving valuable study time.
Purpose
Technological advancements have far-reaching and deep-lasting effects on the music industry. Schumpter (2003) described that the internet and technological devices have revolutionized the way music is created, produced, marketed, distributed, and consumed in this modern era. Some of the current trends in the present day mainly include social networking and mobile marketing. These new trends, according to Balto and Lane (2015), are disruptive innovations as the music market has been transformed to become more accessible, convenient, and affordable, disrupting the existing music business model. This has been attributed to social media platforms creating a broader supply by many players in the industry hence decentralization of production and distribution of music, which in turn causes a shift in the demand and supply chain from the mainstream music and market. This paper conducts a case analysis of Spotify, a company disrupting the music industry.
Case Study Analysis
Spotify is an audio streaming and media service provider that operates in over 180 countries and has over 400 million subscribers. Daniel Ek and Martin Lorentzon founded it to curb music piracy by generating licensing revenues for copyright holders and providing legal ad-supported music service that was free for music listeners. Illegal piracy was a major problem at the beginning of the 21st Century. Music was initially sold in physical forms, such as compact discs, but was now being shared as digital sound files through peer-to-peer file-sharing platforms such as Limewire, which was very appealing as it was free. This illegal piracy resulted in huge revenue losses, as reported by IBISWorld, revenue from the music industry in the U.S. dropped from $14.6 billion in 1999 to $6.7 billion in 2014 and 2015.
Spotify revolutionized the music industry by identifying and satisfying the core needs of consumers and users. For consumers, Spotify provides an unlimited variety of music for a subscription fee or advertisements. Artists also benefit from the platform as it offers the service of easy music uploads and earning royalties each time their song is played. This resulted in a positive direct network of customer-to-artist matching. Furthermore, in 2011 Spotify partnered with Facebook resulting in a wider network and increased Spotify users. In summary, Spotify has irreversibly revolutionized the global music industry in several ways, including reducing piracy, providing affordable music, offering dynamic, versatile music, and ending Apple’s legal digital music monopoly. Spotify is also credited with introducing new music concepts that have taken over the music industry, such as autoplay, mood playlists, and personalized reviews of listening habits for each consumer. According to IBISWorld and First Research reports, these transformations, innovations, and modifications have promoted the music industry’s growth, stability, and sustainability.
Sidebar
A number of trade organizations in the music industry seek to connect, educate and protect key players and members of the music industry (Weitzmann, 2010). One such organization is the American Federation of Musicians (AFM), whose goal is to represent professional musicians’ interests so they can have the best possible working conditions and opportunities. Recording Industry Association of America (RIAA) is another trade organization in this subsector whose aim is to ensure longevity by recognizing excellence in the industry, fighting music piracy, and maintaining standards. International trade organizations such as the International Alliance for Women in Music (IAWM) also exist. IAWM aims to ensure diversity and inclusion in the global music industry by fighting and raising awareness of discrimination and the lack of opportunities for female artists.
Key Word List
Ad-supported: Audio or visual media content that contains or is consumed with advertisements and promotional materials.
Copyright: This is the exclusive legal right an artist has to their work to perform, display, print, record, or reproduce.
Music Piracy: The unauthorized duplication of music work that defrauds the copyright holder of their earnings.
Music Royalties: Compensation payments for licensed use of musical work by the copyright holders.
Subscription fees: Regular payments by consumers on a musical platform that ensures continued access to the platform.
References
Alvarez, R. (2017). The music industry in the dawn of the 21st Century. Working Paper. DOI:10.13140/RG.2.2.32360.67847
Balto, D. & Lane, M., (2015). The music industry as a case study for enabling disruptive innovation in consolidated markets. The Disruptive Competition Project. Retrieved from http://www.project-disco.org/com-petition/041515-paving-way-future-innovations-music-industry-case-study/#. VzwZILLckY
Recording Industry Association of America (RIAA).(2015). 2014 Year-end statistics . Washington : D.C: RIAA
Schumpter, J., (2003). Capitalism, socialism and democracy. London and New York: Routledge