Spotify, a music streaming service released in 2008, has long remained the media platform to beat. The Stockholm based company has adapted swiftly to the ever-increasing market for online music services, paying royalties based on the number of artist streams as a proportion of total songs streamed. The music industry itself has had to adapt massively to changes enabled mostly by technology. Throughout the 1990s, CDs became the standard media through which people consumed music, however, the simultaneous development and increase of home computers led to a massive increase in music piracy, as individuals could download CDs and share them as MP3 files.
In response to this, several companies introduced online platforms offering music through either subscription services or free platforms with advertisements. The first major player in this sphere was, of course, Apple iTunes, established in 2003. Since then, several other competitors have entered the market, including Apple Music, Pandora, and Spotify.
Spotify as a company has perhaps fared best, managing even to weather the storm instigated by the coronavirus pandemic. Spotify offers a paid for Premium service, costing the average user $9.99 a month. The platform had over 144 million premium users by the end of the third quarter of 2020, and 185 million people using the free advertisement-based service. By comparison, Apple Music has an estimated 82 million subscribers. According to the Statista Research Department, Spotify’s subscriber base has more than doubled since 2017; clearly, the company is continuing to keep abreast of its rising competitors.
A relatively new feature which has no doubt aided the company is its shift to podcasting in 2019. According to Bloomberg Businessweek, Spotify now hosts nearly 2 million podcasts – in 2017, they had only 2,500. Popular programs include Joe Rogan and Michelle Obama’s respective podcasts, with Prince Harry and Megan Markle’s new show expected to attract vast listeners also.
Analysis by CNBC suggests that Spotify’s stock worth increased 70 per cent from the beginning of January to June 2020, perhaps reflecting an increase of users as a result of international lock-down conditions. Indeed, stocks in Spotify hit an all-time high on Friday, January 8th; its value hit approximately $66.1 billion. Further, a report released by the BPI (British Phonograph Industry/British Recorded Music Industry) revealed this week the streaming now accounts for over 80 per cent of music consumption within the UK. Music consumption is thus ever a digital affair; some wonder how Spotify will continue to profit from – and indeed continue to dominate – the industry.
The set-up of dual revenue through the free but advertisement based and the subscription-based service differentiates the company from its competitors; Apple Music, for instance, demands subscription payment from all listeners following a free-month trial. The company further established an effective marketing strategy through its ‘Wrapped’ feature, by which users can share their yearly listening statistics on social media, encouraging further use of the platform and essentially ensuring free promotion by its subscribers. With its platform offering users over 60 million songs, chart tracking, and new media such as podcasts, the platform has certainly developed an effective medium for public consumption.
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