Spotify

Image: newsroom.spotify.com

LINK: https://www.menti.com/gngh8ez3rxVoting code: 3725 3045

Source: https://www.riaa.com/u-s-sales-database/

* CD - 3.9%

* LP/EP - 6.9%

In 2021:* Paid subscription - 57.2%* On-demand streaming (ads) - 11.7%* SoundExchange distributions - 6.6%* Limited tier paid subscription - 6.1%* Synchronization - 2.0%* Download album - 1.9%* Other ad-supported streaming - 1.4%

Source: How Spotify Saved the Music Industry (But Not Necessarily Musicians) (Ep. 374) https://freakonomics.com/podcast/spotify/12

"First, you need to have a really good idea of what it is that you’re trying to solve. And in our case... (what) we were trying to solve was it needs to feel like you have all your music on your hard drive... So, it was very clear to me that if we could deliver something that felt like you had all the world’s music on your hard drive, it would likely be way better than piracy, which was the dominant force of music consumption at the time."

* Please state the facts of the case.- Detail what has made Spotify successful so far- Detail what has been the main problem for Spotify

Source: Team activities compilation

for Spotify?

from the Five-forces framework

What can you conclude

Substitutes

Rivals

ConcertsPiracy

Radio YouTubeDigitally purchased music Vynil, CDs, cassettes

Other streaming services Other legal/illegal companiesNew entrants

Big record labelsOther record labels Artists Podcasters Suppliers

Casual listeners Music enthusiasts AdvertisersBuyers

...

Apple MusicAmazon MusicTidalPandoraGoogle Play Music DeezerNapster

What changes did digitalization bring to the value chain?

advertising

users

distribution

record labels

artists / bands

Who is the strongest player?

MAUs by region

Spotify Technology S.A. Announces Financial Results for First Quarter 2022

https://www.businesswire.com/news/home/20220427005371/en/Spotify-Technology-S.A.-Announces-Financial-Results-for-First-Quarter-2022

https://youtu.be/dhQh-tryXOg

Source: Osterwalder, A. (2013). A better way to think about your business model. Harvard Business Review, 6.

model in a simple way.

captures value.A. Osterwalder (2005) proposed there were nine "building blocks" that made up a company's business model.With the Business Model Canvas, organizations can conduct structured, tangible, and strategic conversations around existing or new business.The nine building blocks fit into one page so you have a complete look of the business

A business model describes the rationale of how an organization creates, delivers, and

You can get the original PDF template from the link below.

Key resourcesKey activitiesKey partnersHow much?Cost structure Revenue streams

How?

ChannelsCustomer relationships

Customer segments

Who?

Value proposition

What?

Source: https://canvanizer.com/downloads/business_model_canvas_poster.pdf

Group the 9 building blocks into 4 areas:

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Examples:Mass marketNiche marketSegmentedDiversified

to reach and serve.An organization can serve one or several customer segments.

Customer segmentsAre the heart of any business model.This building block defines the dierent groups of people or organizations an enterprise aims

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Price

DesignBrandConvenience

NewnessPerformanceCustomization

customer segment.Examples of elements that contribute to value creation:

Value propositionsIs the reason why customers turn to one company over another.It seeks to solve customer problems and satisfy customer needs with value propositions.This building block describes the bundle of products and services that create value for a specific

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

segments to deliver a value proposition.Examples of channels:Direct - own stores, website, sales forceIndirect - partner stores, distributors, wholesalers

Channels Value propositions are delivered to customers through communication, distribution, and sales channels, which comprise a company's interface with customers.This building block describes how a company communicates with and reaches its customer

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Personal assistanceSelf-serviceAutomated serviceCommunities

segment.Relationships can range from personal to automated.Examples of customer relationships:

customer segments.A company should clarify the type of relationship it wants to establish with each customer

Customer relationshipsThis building block describes the types of relationships a company establishes with specific

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Advertising

SalesSubscription feesLicensingLending/Renting/Leasing

streams from each customer segment.Examples of revenue streams:

Revenue streamsResult from value propositions successfully oered to customer segments.This building block represents the cash a company generates from each customer segment (costs must be subtracted from revenues to create earnings).A company must ask itself "for what value is each customer segment truly willing to pay?"Successfully answering that question allows the company to generate one or more revenue

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Key resources can be:PhysicalFinancialIntellectualHuman

work.These resources allow a company to create and oer a value proposition, reach markets, maintain relationships with customer segments, and earn revenue streams.Dierent key resources are needed depending on the type of business model.

Key resourcesThis building block describes the most important assets required to make a business model

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Exaples of key activities:ProductionTrainingService deliverySupply chain management

business model work.Like key resources, they are required to create and oer a value proposition, reach markets, maintain relationships with customer segments, and earn revenue streams.Like key resources, dierent key activities are needed depending on the type of business model.

Key activitiesThis building block describes the most important things a company must do to make its

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Examples partnerships:Buyer-supplier relationshipsStrategic alliances between non-competitorsCoopetition (strategic partnerships between competitors)Joint-ventures to create new businesses

Reasons for creating partnershipsOptimization and economies of scaleReduction of risk and uncertaintyAcquisition of particular resources and/or activities

model work.Some activities are outsourced and some resources are acquired outside the enterprise.

Key partnersThis building block describes the network of suppliers and partners that make the business

Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

partners.Costs should be minimized in every business model, however low cost structures are more important to some business models than to others.Two broad classes of business model cost structures:Cost-driven - models focus on minimizing costs wherever possible.Value-driven - are less concerned with the cost implications of a particular business model design, and instead focus on value creation.

revenue streams all incur costs.Such costs can be calculated relatively easily aer defining key resources, key activities, and key

Cost structureDescribes all costs incurred to operate a business model.Creating and delivering a value proposition, maintaining customer relationships, and generating

Can Spotify do something others can't do?

for users?

Does Spotify have something important

What is Spotify's competitive advantage?

Source: https://stephenfmccarthy.files.wordpress.com/2014/12/bmc-22.png

LINK: https://forms.oice.com/r/5gwdU97QRq

Interesting video from CNBC "Netflixʼs DVD business is still alive — hereʼs what it looks like"click here to watch

Due Monday September 26 at 11:59pm:* Individual assignment - video

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Go to Module 2 in CANVAS.

See you in two weeks.