Spotify is an online music streaming service, started in Sweden in June 2006. Spotify was among the earliest services to make the “freemium” business model popular. Users can pick a basic service with ads or upgrade to a premium plan. The premium plan gives unlimited music streaming and extra features like personalized playlists and curated experiences.
Finding the middle ground
In the early 2010s, Spotify became popular by offering a middle ground between the iTunes music store from Apple (where users had to purchase the songs they wanted to listen to) and frequent online piracy that affected sales at that time. It provided a legal way for users to listen to their favorite music without paying a large price for each track or album. By 2019, Spotify had one of the highest user conversion rates among all subscription-based online services.
Unlike other music services where the artist is paid for each track the user downloads or buys, Spotify pays royalties to the music labels based on the number of streams of the particular artist who works for the label. Spotify has stated that 90% of the total revenue has been used to pay the royalties to the music labels.
Spotify is really popular because it changed the way customers listened. It’s the most downloaded music app and has a 46% user conversion rate from 2019. However, Spotify struggled with user retention following the market delays after the pandemic.
DVC Framework for Spotify
Leave a Reply