Spotify - Company Presentation free essay sample

Ninth peer-to-peer technology. To use the service, users must download a program compatible with Windows and Mac SO X. Its business model is to aggregate content from rights holders, distribute it to consumers through a technical platform, and generate revenue through users who choose either a free ad-funded service or a subscription service. The goal of Spottily is to help people listen to whatever music they want, whenever they want, wherever they want. Spottily creates value in its service, which give users convenience and simplicity.Consumer save time with Spottily and have 24-hour access anywhere. In addition, users can interact with other users who share similar music tastes. The company is relatively new on the market, it Nas founded 2006 by the Swedish entrepreneurs Daniel Eek and Martin Lorenz and launched for public access in October 2008. From that point, Spottily has expanded from a Swedish market to a market covering several European countries. It now has its eyes on the global market.There are four different versions of the music service called Free, Open, Premium and Unlimited. Spottily Free (invite only) is as the name implies for free, but comes with commercials in between songs. Spottily Open IS free as well, but there is a limitation of twenty hours per month. To get access to Spottily Premium, users need to pay a monthly subscription fee of 99 SEEK, and will gain privileges such as ad free music, offline access, a mobile application and invitations for friends to use Spottily Free.The fourth and newest addition to the Spottily platform is the Unlimited (49 SEEK) option, this allows users to listen to music online, without the ads, but not music offline or on a cell phone. REVENUE MODEL Spottily uses two different revenue models. The most popular version of Spottily is the d-based free version, which is used by over 95% of users. In this version, streamed music is interrupted by 30 second ads at regular intervals. The other revenue model used by Spottily is one based on subscriptions and where the customers do not have to listen to advertisements between the songs.For this version of Spottily, called Spottily Premium/Unlimited, the customers have to pay SEEK 99/49 or about $13/6 per month. In mid March 2010 Spottily was estimated to have approximately seven million users and about 320,000 of these are paying for Spottily Premium. The number of Premium users in January the same year was reported as 250,000 users. According to Spottily UK marketing director Paul Brown, 20000 users are subscribing to the Premium service every week. The increase in premium users can be attributed to several factors. One possible reason could be 1 http://www. Known. Net/news/software/09/05/02/spottily-review-the-tunes-killer 3 that users who previously used the free versions has grown tired of the increased length of advertisement and have therefore switched to the Premium or Unlimited erosion. As well, the Premium version is now offering more advantages than Just the or Apple phone as well as Android phones. , allowing Spottily Premium users to listen to their Spottily playbills on the go. They are also able to download playbills to their phones and computers and listen to them even without an internet connection.For users with high bandwidth, there is also the option of an increased bit rate, which means that the audio quality is increased to near CD quality. Since Spottily is a very pun company as well as a private company, it is hard to obtain recent financial information. The annual report for 2008 reported a loss for Spottily of USED 4. 4 million. However, Spottily was launched for public access in October 2008 which that the financial information for this year does not give us much information about their current financial situation.The largest costs for a new IT company such as Spottily are development costs. Since Spottily is a private company, there are no publicly released figures on these costs but based on Specifys large losses in 2008 and the fact that the company has been forced to ask their investors for over 50 million dollars, it can be assumed that the initial development costs are several million dollars. However he development costs will most likely be much lower for the coming years since these costs are always largest in the start up stages of a company.Marketing and sales, for Spottily, is partly about making potential customers aware of the service, activities, for the company, aim at online service to customers through support fo rums, FAQ and email response management. Through its blob, they have direct interaction with its users where they let the users speak their mind and sometimes also partake in competitions. The blob is a unique way for Spottily to get closer to their customers and enhance its brand, by allowing customers to interact with Spottily like a friend.Although Spottily is directly linked to the big record labels, who recently eave earned a lot of bad will, they manage to monotone on their friend image and Nor in opposition to the record labels. Supporting activities Corporate infrastructure refers to Spottily activities such as finance, legal and quality management Just like any other firm. Human Resource Management is a small part of Spottily, which only has 90 employees, each one with a certain technical knowledge and competence. An example of Spottily unique approach is their way of hiring.Just recently, Spottily held a programming challenge to attract potential employees, a competition that rendered hundreds of applicants ND a lot of media attention from newspapers and blobs. Technology development is ITIL to Spottily in the highly competitive online music industry, where it is important to constantly provide the users with new updated services and functions. Here, Spottily utilizes its blob to get feedback and user interaction on its developments and possible new features.Operations, for Spottily, is the platform that allows the users to listen to the music that the company distributes. This is where the digital transformation process takes place, and thus it is also a somewhat critical activity. Overall, Spottily has realized that if it is going to be able to compete in a web 2. 0 (or possibly 3. 0) world they have to 5 adapt to its changing and dynamic environment. They constantly try to improve their service, by interacting with the community theyve built up.Instead of selling a service directly to their customers, they first ask them: Is this something you would like? If not, we will not produce it FIVE FORCES Competitors Spottily has many competitors, such as Greenshank, Last. FM, and Dozer. All of the mentioned companies offer online services where users can listen to music for free. Some have, as Spottily has, a version where customers pay to skip any commercials. However, some rival companies are illegal Greenshank stated that they do not indemnity their users for any unlicensed material uploaded.Despite the fast paced changes of the internet, these competitors impose a small threat on Spottily. Unless rivals can find new revolutionary ways to offer customers legal music, the threat is not overwhelming. As such, Spottily should focus on attracting those customers who still are not using any of these legal services. Substitutes There are also many substitutes that compete for the same customers. A major substitute to Spottily is Apples well established music service tunes where customers can buy and download music to a computer, pod or phone.Other important substitutes are internet. Overall, the threat of buying CDC in store is not that big as people commonly choose to illegally download in a modern age. This is something Spottily tries to address by making its services easier to access and by continuously expanding its library. Spottily tries to position itself differently from its competitors by giving users the option to have their legal service for free or not and whether users want to pay or having the opportunity to use it offline or on an phone.Spottily puts a lot of focus on its networking effect to find new users and to try to keep them loyal to the company. An example of this is when Spottily published various famous celebrities playbills for users to check out. New Entrants Spottily is very sensitive to new services offering customers a better means of accessing music since switching costs are low for customers. Rather, inconvenience is a bigger factor in that customers would have to redo their playbills still manageable, nonetheless.However, the cost of entrance s very high so the number of new competitors is not very great. By developing Spottily and offering more variation and different services Spottily can differentiate themselves and in that way create a stronger bond between the custome rs and the company. Suppliers Spottily has contracts with many record labels, four of them are among the biggest record labels in the world Universal, MI, Warner and Sony BMW. The suppliers have great power over Spottily with the ability to breakaway at any time if they feel that the service is not bringing in enough revenue.This is one of the biggest threats, since Spottily is dependent on the record abeles. If Spottily improves its brand image and continues to grow as they have since the start, they might have a bigger impact on the record labels, which could result in a power shift and increased bargaining power (for Spottily). Customers The customers of Spottily consist of three groups; Free, Premium/Unlimited, and advertisement users advertisement users being customers that pay to have their commercials mixed in with the free users playbills.By creating software that is easy to use, quick and hassle free, in combination with giving different options of using the service and instant development, S pottily gives consumers an alternative to the illegal market. Spottily has also realized that in order to reach out to the younger crowd, they have to provide different options for different segments and subbasements. Spottily strategy for attracting customers vary a bit depending on the type of customer.Free users are attracted extensively through social networking and word of mouth, everyone can connect their playbills to their Backbone, Twitter, Youth, and Flicker accounts, and Premium users can also send invites to friends. The company also hopes to convince customers to upgrade to Premium accounts by mentioning this possibility during commercial breaks. However, taking into account their strategy to attract customers, one might assume that the majority of people reached are of a younger age, socially active, and frequent users of computers and the internet.To reach out to the older demographic, the one that doesnt use Internet and online social networking frequently, Spottily has unveiled a new collaboration with the Swedish company Tell that may, on the other hand, have a chance to draw the attention of an older pendent on maintaining a large user base in order to attract advertisers, if so me small change in service cause the number of free user to dwindle it could have major effects on their sources of income.Therefore, these sensitive user and customers could be considered to have medium to high bargaining power. Peer-to-peer technology is a way of networking computers over the internet so they can exchange files directly. In relation to Spottily, users can share music among each other through the program and there are even possibilities to import songs from either tunes or directly from local files. The peer-to-peer technology is a fast and free way to get access of music in a very short time.Although at the same time, there are illegal users of pop technology. Spottily can cannibalize on the sales that the music labels are losing to the advancement of the Internet. By allowing users to legally listen to music via streaming it on demand probably the most attractive feature of the program and one way to strategically attract users. With international intellectual property laws tightening up, Spottily is an easy alternative; it also offers seers another option to other indirect competitors like tunes.One of the biggest changes for the music industry during the 20th century were the rise of recorded sound and the radio, which lead to a change in power from the sheet music publishers to the record indus try. Similar changes are taking place today En falling revenues have led to the demise of many music retailers, and musicians are more dependent on music promoters. In the last decade, a remarkable growth in digitally distributed music has been witnessed. During 2009, more than a quarter of the music recording industry revenues came from digital distribution according to the International Federation of the Phonographic Industry.Of course, there has also been a massive growth of illegally downloaded music, but it has been difficult to prove the correlation between this development and the falling sales of music albums and revenues of record labels. Furthermore, recent increases in consumer spending on music related hardware and software have provided many technology companies with a promising new income-stream. The field in which Spottily is engaging in is a very dynamic one. With a revolutionary business model, what Spottily essentially is trying to do, is to sell a service which people are now getting for free.