Future of Spotify
CATEGORIES
- Asset Performance
- Innovation assets and pipeline
- Disruption vulnerability
- Company headlines
- Company’s future prospects
DATA ACCESS
Spotify is a music streaming service developed by Swedish company Spotify Technology. It provides DRM-protected content from record labels and media companies. Spotify is a freemium service; basic features are free with advertisements or limitations, while additional features, such as improved streaming quality and music downloads, are offered via paid subscriptions.
Financial Health
Asset Performance
Innovation assets and Pipeline
DISRUPTION VULNERABILITY
SCENARIOS
Probable
*Artists will release smaller products more often. Full albums will cease to be the desired product.
*In the future, artists will be given even smaller royalties than nowadays (today Spotify pays $0.006 - $0.0084 per stream to the music rights holder).
Plausible
*Spotify will add social features both to the desktop and mobile app. It will be possible to share content, comment on one’s activity, send messages, interact with artists. The aim is to allow social interactions within Spotify, without the need to use other apps, like Facebook or Instagram.
Possible
*Nowadays music often plays only in the background (at the gym, in a shop or restaurant). People like listening to Spotify’s themed playlists as well (e.g. Sleep Tight or Deep Focus). In the future, music will play non stop and will be adjusted to people’s activities, without their interaction - when walking, showering, cooking, arguing, relaxing or waking up. It will happen through a Spotify device which will utilise bone conduction, and recognise emotions and activities of the user based on biometrics.
COMPANY’S FUTURE PROSPECTS
*The number of premium subscribers is growing. It is forecasted that by the end of 2018, 46% of Spotify users will be premium subscribers.
*To increase global sales - Spotify is becoming increasingly American, with 40% of its revenue in 2016 coming only from the US. In addition, there are still many countries where Spotify is not available.
*Spotify makes very little money from advertisements ($326m in 2016). In this aspect, it is far behind its competitors, e.g. Pandora ($1.1bn in 2016).
*The subscription price has been falling since 2013. The price has to go up in order to note an operating profit from subscriptions.
*To stay ahead of Apple Music, Spotify’s main competitor.
*To remain competitive with other companies in the light of their new service developments, e.g. YouTube Red, which finally allows locking the phone screen when listening to YouTube content.
*Spotify adds ‘fake artists’ onto their major playlists. They are mostly artists using pseudonyms who sell their copyrights to Epidemic Sound company, who then add the songs to Spotify’s themed playlists. It puts Spotify’s credibility into question, as the playlists’ content is said to be thoroughly selected by experts.
*To introduce social network features on Spotify to enable interactions between users, as well as allow artists to engage more with their fans. That could involve the options of sharing content with others, commenting on their activity, messaging each other and see their favourite artists’ activity - all within the Spotify app.
*Possibly lower the payouts for music rights owners and increase the subscription fees.
*Spotify’s global annual value of paid streaming music is forecasted to reach $16.5 billion in 2020. In 2025, the same value is predicted to rise to $20 billion, with 336 million paid subscribers.
*To increase global sales, especially in Africa and Asia.
*There will be a change in understanding and perceiving global music superstars. It will be easier than ever to share one’s music due to the high-speed internet, universal access to digital devices and the development of streaming. Anyone will be able to become a well-known artist, gain an online fanbase and set a tour.
*Music consumption already trends away from active support for a specific artist towards passive listening to usually random or globally top songs. It decreases the chance for independent artists to thrive in the music streaming industry.
*Artists will stop releasing full albums, as it will be less profitable than releasing singles and short EPs on Spotify or other streaming services.
*Physical music albums will no longer be produced due to the streaming services taking over the industry. CD albums, similarly to vinyl records, will be a rarity purchased mainly by collectors and musically oriented people.
*A majority of artists will compose their songs based on what is trending on streaming services.
- Forecasts collected by Alicja Halbryt