Spotify SWOT and PESTLE Analysis

Strength

1. Competitive advantage of massive subscriber base: As of the second quarter of 2022, Spotify had 188 million premium subscribers worldwide, up from 165 million in the corresponding quarter of 2021, riding high on the popularity of its discounted Family Plan and Student Plan offerings. Whereas, its closest competitor, Apple music has around 70 million paying subscribers. Spotify is the market leader in this category. With such a huge number of subscribers, music artists and composers are hugely inspired to be on the leading audio platform and work out a partnership with Spotify. The company made renewed deals with Universal Music Group, Sony and Time Warner which control over 66% of the streaming service’s catalogue. It has also secured streaming rights for 15 mn songs in the USA. Artists like Taylor Swift and Jay Z have initially had problems with partnering with Spotify and have removed their songs from the service. However, since Spotify is currently the market leader in the music streaming services category, they have returned to the platform 2-3 years later. This had given Spotify a bargaining power. Adding to this, 90% of Spotify's revenue comes from the paying customers. Non-paying customers constitute very less because ad-revenues are low.

2. Music personalization and recommended feeds based on user preferences through machine learning: Apart from having 168% more paying subscribers than its next best competitor, Apple Music, Spotify has also entered the market seven years earlier. After the user starts listening to music, it develops a profile of the listener, based on songs he liked and saved. This data is used for giving recommendations for the users based on their interest to have a positive impact for the business and enhance the listening experience for the users. As of 2021, the platform hosts over 82 million tracks, including more than 3.6 million podcast titles. The company has also started Fans first program where the artists can find their top fans and target them on the app based on the data and analytics provided by Spotify. Apart from this, Spotify also shares user preferences with artists, which can help them in multiple ways, like planning the right songs for a particular audience, organizing music tours with popular themes and earning ultimate audience delight quite effortlessly.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

1. Growth of smartphones and cheap data rates: Consumption of internet on mobile phones has been increasing rapidly owing to two factors, that is, increased affordability of smartphones and cheaper data rates. The global ratio of people who own smartphones is expected to be 77 out of 100 by 2025. Adding to this, Deloitte report suggests that the internet penetration across the globe is expected to increase roughly by 50% from the year 2017 to 2025, that is, 61 out of every 100 people would be having access to mobile internet. According to a report about consumer insights in music by IFPI, 3 out of 4 smartphone users listen to music on their device, out of which 86% of them use on-demand services for streaming music. Considering the largest market for Spotify, India, the number of smartphone users in the country is expected to reach about 830 million by the end of 2022. Due to low data rates, the common man is also able to afford it. To cater to the needs of this segment, manufacturers have started producing low-cost smart phones. This will promote users to use the free services, if not the premium ones and thus contributing to the ad revenue.

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Legal

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Environmental

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