The most frequently used app on my phone is Spotify; the ability to stream thirty million songs for free is worth putting up with the inconvenience of having to listen to ads every six songs, as I am not willing to pay the fee of CAD 9.99 + taxes.

In the on-demand music streaming industry, Spotify is one of its rising stars. One of its biggest selling points is the incorporation of Facebook into its music platform, enabling users to share playlists, see what their friends are listening to, and follow their favourite artists on Spotify. Other differences include the smart radio feature that learns your music preferences, and the user and app compiled playlists. Like Apple Music, Spotify’s points of parity are over thirty million songs and a majority of the hottest artists (excluding Taylor Swift, whose music is too “valuable” to be listened to for free). The “freemium” model powers Spotify, forcing non-paying users to watch ads and listen to music on shuffle.

 

I wish I could watch Netflix for free, but alas, Netflix does not utilise the Spotify “freemium” model. The movie and television subscription giant shares similarities with Spotify, such as the wish to be number one in their respective industries.

As my classmate, Agnes, discussed in her blog post, Netflix’s success stems from its differentiation strategy: capital investment in original programming and brand loyalty. To build on her views, Netflix’s other big draw is convenience and accessibility due to their multi-device and operating system capabilities. Their expertise to stream movies and television shows at manageable costs with the help of innovative technology have made Netflix a formidable opponent.

Spotify should learn from Netflix, since their product positioning and strategies are very similar. Spotify struggles with high royalty fees and low switching costs; Netflix has mastered cost balancing and brand loyalty. A possible course of action would be for Netflix and Spotify to merge, creating a media conglomerate.

Such a move would be vetoed by the government due to the reduction in competition, but if it did occur, the merged companies would be unstoppable. The wealth of customer data and material available for selection would solve the customer’s dilemma of what to watch and listen to. A subscriber package including access to both services on a combined platform would be the hottest item on the market; I would happily part with my money to have access to such a combined platform.

Word count – 405

Picture Credit:

Spotify Logo: all rights belong to Spotify, sourced for Spotify’s website – https://developer.spotify.com/design/

Netflix Logo: all rights belong to Netflix, sourced from Wikimedia Commons – https://commons.wikimedia.org/wiki/File:Netflix_logo.svg

Sources:

Alhashim, Ashraf. “Pandora Versus Spotify: A Pricing and Technology Analysis.” AshAlhashim.com. Ashraf Alhashim, 16 Mar. 2013. Web. 13 Oct. 2016. <http://www.ashalhashim.com/2013/03/16/pandora-versus-spotify-a-pricing-and-technology-analysis/>.

Chaffey, Dave. “Spotify Case Study.” Smart Insights. Smart Insights (Marketing Intelligence) Ltd., 18 Apr. 2015. Web. 12 Oct. 2016. <http://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/spotify-case-study/>.

Engel, Pamela. “Taylor Swift Explains Why She Left Spotify.” Business Insider. Business Insider, Inc, 13 Nov. 2014. Web. 13 Oct. 2016. <http://www.businessinsider.com/taylor-swift-explains-why-she-left-spotify-2014-11>.

Ranjan, Tanvi. “Spotify’s Strategy – Road to Success.” Strategy Development:. Strategy Development:, 27 Mar. 2013. Web. 13 Oct. 2016. <http://strategyatheinz.blogspot.ca/2013/03/spotifys-strategy-road-to-success.html>.

Roettgers, Janko. “Should Netflix Buy Spotify?” Gigaom. Gigaom, 18 June 2012. Web. 10 Oct. 2016. <https://gigaom.com/2012/06/18/should-netflix-buy-spotify/>.

Shim, Julie. “Spotify – An Analysis of Spotify’s Market Strategies.” Shim’s Portfolio. Carnegie Mellon Computer Club, 10 Oct. 2016. Web. 13 Oct. 2016. <http://www.contrib.andrew.cmu.edu/~dshim/portfolio.html>.

Tan, Agnes. “Netflix vs. Shomi.” Agnes Tan’s Blog. UBC Blogs, 02 Oct. 2016. Web. 11 Oct. 2016. <https://blogs.ubc.ca/agnestan/2016/10/02/netflix-vs-shomi/>.