Abstract
In this article, we have conducted Spotify SWOT analysis. The article explains the strategic implications of internal and external factors that impact Spotify business performance. The shared information is useful for the market researchers, students, entrepreneurs, music streaming brands, and anyone who is interested in getting latest information about Spotify, and global music streaming industry.
1. Introduction
Spotify is world’s 568th most valuable company based on market capitalization. It ranks #9 in top brands for Gen Z, and dominates the global music streaming industry with more than 30% market share. This article explores the Spotify’s strategic positioning by applying SWOT framework.
2. Company overview
| What is company name | Spotify Technology S.A |
| When was Spotify established? | 2006 |
| Where Spotify headquarters are located? | Stockholm, Sweden |
| In which industry Spotify operates in? | Audio streaming and media service providing industry |
| Who is Spotify CEO? | Daniel EK |
| Spotify number of countries? | 184 |
| Spotify number of employees? | 9,473 |
| Spotify revenue (2022) | $12.356B |
| Spotify profit/loss (2022) | $ -(0.453B) (loss) |
| Spotify market capitalization(2023) | $30.44B |
3. Spotify SWOT Analysis
3.1. Spotify strengths
3.1.1. Strong global presence
Spotify is currently present in more than 180 countries. Following graph shows the Spotify’s growth in European, North American, Latin American, and other world regions from 2018 to 2022:
Source: Tech-Jury
3.1.2. Positive growth forecasts
Spotify is users’ preferred music streaming platform. This preference reflects in the significantly higher growth in Spotify user subscriptions (2016 to 2023) compared to its competitors:
Source: Marketing Charts
Spotify’s competitors are unable to beat it in US music streaming industry.
Spotify is the market leader in music streaming industry, holding 31% market share. Here is the Spotify competitors analysis based on market share:
Source: The Hustle
3.2.4. High usage growth
Spotify has experienced a 17% year-on-year subscriber growth from 2015 to 2023:
Source: Business of Apps
It has 220 million subscribers in 2023.
3.2.5. Bright podcasting future
Spotify has successfully increased its podcasting listeners from 10 million in 2018 to 100 million in 2023. Future forecasts are also impressive- Los Angeles Times.
3.2.6. Growth in paid subscriptions
Spotify has increased the number of its paid subscribers (Spotify marketing<Spotify pricing<Freemium pricing) in its home turf:
Source: Statista
3.2.7. Strong competitive performance
Spotify’s competitive advantage lies in its ability to offer more personalized experience (Spotify marketing< Spotify promotion< Spotify social media marketing) than its competitors:
Source: Sletten
3.2. Spotify Weaknesses
3.2.1. Net loss
Despite impressive subscriber growth, Spotify’s net loss is growing from 2017 to 2023:
Source: Statista
3.2.2. Weak competitive differentiation
Spotify’s competitors offer approximately all the same features, weakening the brand differentiation.
3.2.3. High operational cost
One of the Spotify challenges is rising operational cost. In 2023, Spotify announced to reduce its workforce by 6%. However, analysts consider it an ineffective measure to control the costs.
3.2.4. Poor quality
Spotify’s competitors are offering higher quality audio for much less- reports Insider Intelligence.
3.2.5. Ineffective revenue model
Spotify is getting crushed under its own weight. The company’s revenue model is simple, yet awful for its bottom line. Spotify under-utilizes the pricing options (Spotify marketing< Spotify pricing), and needs to address the issues with music industry negotiations.
3.2.6. Free tier limitations
Spotify faces difficulty in monetizing its free-tier customers, which makes the overall business model unprofitable and non-sustainable.
3.2.7. Pays less to music owners
Spotify pays lesser to the music owners compared to its competitors, which could affect its ability to attract and retain music artists:
Source: Free your music
3.3. Spotify opportunities
3.3.1. Global music streaming industry growth
Global music streaming industry will grow with an impressive CAGR of 14.7% from 2022 to 2030:
Source: Globe Newswire
Spotify can capture this opportunity and enter in emerging markets.
3.3.2. Expansion in emerging markets
Music streaming industry is experiencing rapid growth in emerging economies. Following graph shows music streaming revenue is experiencing highest growth in Africa (35%), followed by Latin America (26%) and Middle East (24%):
Source: Business Day
3.3.3. Video streaming industry
Video streaming industry still has room for growth, as depicted in following graph:
Source: Statista
Spotify has all the capabilities to enter in video streaming industry.
3.3.4. Growth in virtual events
Global virtual events market will experience double digit growth of 13% from 2018 to 2030:
Source: Polaris Research Analysis
Spotify may concentrate on arranging live-streamed music concerts to capture this opportunity.
3.3.5. Growth in podcasts
Global podcast market is experiencing an exponential growth. The market will grow at 27.8% CAGR, as shown in following graph:
Source: Market.us.
It presents an exciting growth opportunity to the Spotify’s podcast segment.
3.4. Spotify Threats
3.4.1. Royalty rate dispute
Growing disputes over royalty rate between streaming companies and music publishers/songwriters could affect the profitability of Spotify and other market players.
3.4.2. Data privacy concerns
Due to consumers’ growing privacy concerns, the regulations governing fair use of consumer data are getting stringent with time. It can affect Spotify’s ability to offer the personalized content.
3.4.3. Music piracy
Music piracy has emerged as a major threat in the music streaming industry. A 2022 survey revealed how young customers are turning to the pirated sites to listen music:
Source: Statista
3.4.4. Economic downturn
Due to looming recession and rising inflation, consumers will be having less money to spend on entertainment. It will directly affect the Spotify’s profitability.
4. Summary- SWOT Analysis Spotify
| Spotify Strengths Strong global presence Positive growth forecast High market share High usage growth Bright podcasting future Growth in paid subscriptions Strong competitive performance | Spotify Weaknesses Mounting net loss Rising costs Poor quality Ineffective revenue model Free tier limitations Pays less to music owners |
| Spotify Opportunities Growing music streaming industry Emerging economies Video streaming industry Virtual events market Podcast growth | Spotify Threats Royalty rate dispute Data privacy concerns Music piracy Economic downturn |
5. Recommendations
- Diversify portfolio by entering in the video streaming industry.
- Explore ways to better monetize the free-tiered segment.
- Focus more on the podcast segment to capture the available growth opportunities.
- Expand business operations in the emerging economies (like African region).
- Reconsider the negotiations over royalty fee with publishers.
- Maintain robust data security and privacy measures to build trust.
6. Conclusion
The overall Spotify analysis highlights its competitive strengths and weaknesses in the music streaming industry. Spotify can leverage its key strengths (like strong global presence and high market share) to diversify portfolio and enter in emerging markets. Spotify also needs to overcome its weaknesses (mounting loss, weak competitive differentiation, and ineffective revenue model) to preserve its competitive positioning in the market.
Click here to read our article ‘Spotify marketing strategy’
7. References
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Spotify — About Spotify. (2023, October 24). Spotify.
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Dent, M. (2023, April 12). The economics of Spotify. The Hustle.
Spotify Revenue and Usage Statistics (2023) – Business of Apps. (2023, August 2). Business of Apps.
Contreras, B. (2023, March 9). After recent struggles, Spotify charts its podcasting future – Los Angeles Times. Los Angeles Times.
Zandt, F. (2022, March 17). Spotify succeeds on its home turf. Statista Daily Data.
Zandt, F. (2023, October 24). Spotify: First profitable quarter since Q1 2022. Statista Daily Data.
Green, T. (2023, January 24). Layoffs Won’t Solve Spotify’s Biggest Problem. The Motley Fool.
Yuen, M. (2023, August 18). Spotify hits record number of users worldwide but struggles to monetize growth. Insider Intelligence.
Spotify’s final song: Why Spotify is doomed. (n.d.).
How much does Spotify pay per stream? Streaming payouts comparison [2023] – Blog – FreeYourMusic. (n.d.). FreeYourMusic.
Markets, R. A. (2022, June 15). Global Music Streaming Market (2022 to 2030) – Size, Share & Trends Analysis Report. GlobeNewswire News Room.
Udugba, A. (2023, March 29). Sub-Saharan Africa grew recorded music revenue fastest in 2022 – IFPI. Businessday NG.
Feldman, S. (2019, March 25). Infographic: Video streaming Still Has Room to Grow. Statista Daily Data.
Global Virtual Event Platform Market Size Report, 2022 – 2030. (n.d.). Polaris.
Market.us. (2023, October 13). Podcasting Market Size, growth and Statistics by 2032. Zandt, F. (2023a, September 8). Young music fans increasingly turn to music piracy. Statista Daily Data.
