Development and Market Penetration. These Two Strategies Are Simultaneously Applied in

Spotify is a Swedish company that streams music, video, and podcasts through licensing
agreements with record labels and media companies; it also offers its own exclusive
content. Spotify, which is available in the Americas, Western Europe, parts of Asia, and
Australia and its surrounding islands, was founded in 2006 by now-CEO Daniel Ek and
Martin Lorentzon. The company is known for helping to legitimize the "freemium" model:
the tiered pricing strategy whereby basic services like music streaming are provided free of
charge (with advertising, in Spotify's case), but premium services like ad-free listening and
direct downloads cost users extra.
1. Brief of strategy about products or services
Spotify’s Generic Competitive Strategy and Intensive Growth Strategies
Generic Strategy for Competitive Advantage. Spotify applies the cost-leadership generic

competitive strategy. A low-cost position creates a strategic advantage for the music
streaming business in terms of making the service’s price attractive in the international
market. On the other hand, a broad scope is strategically targeted for the purpose of building
Spotify’s network of online users. Both of these characteristics of the generic strategy support
the network effects business model and the network orchestrator business model by attracting
music artists and subscribers worldwide.
As Spotify’s user base grows, the online digital content distribution platform becomes more
attractive to artists and fans through network effects
Intensive Strategies for Growth. Spotify’s main intensive growth strategies are market
development and market penetration. These two strategies are simultaneously applied in
order to strengthen the company’s competitive position as the biggest and leading music
streaming business in the global market. Based on the Igor Ansoff Matrix, market
development aims to further expand Spotify’s service availability to more countries and
regions.
Market development and market penetration provide a competitive advantage to Spotify’s

operations based on economies of scale, while also supporting the network effects business
model and the network orchestrator business model: as the population of artists and
subscribers grow, the music-streaming platform becomes even more beneficial and valuable
to the artists and subscribers.
2. Consider all global marketing factors (such as economy, trade, society and
culture, politic, legality, regulation, information system)
- Local Music, Global Audiences
Spotify leverages data from its user base to find and track rising local artists, which they then
promote to a global audience. The purpose of this is twofold: not only will that audience find
artists they recognize on Spotify, but those local artists can use Spotify as a step towards
gaining a global audience.
Hyper-Localized Ads
Spotify has launched a number of highly successful, hyper-localized ad campaigns which

simultaneously appeal to targeted audiences while also globalizing the concept of digital
streaming.
In 2016, Spotify took time to acknowledge that the year had been exceptionally strange for
many and started a “Thanks, 2016. It’s been weird” campaign in the US, UK, Germany and
France. This campaign localized not just the language, but also the songs mentioned, which
helped the ads to stand out in each target country. The ads revealed that Spotify had unique
cultural knowledge in each targeted country. They featured funny and timely content that
viewers could relate to.
- Economic
Streaming sites increasingly make subscriptions increasingly more affordable beyond

discounted trial periods, especially for students. Spotify Premium starts at $9.99 per month,
$4.99 for students, and $14.99 for a family. Songs on iTunes sell from $0.69 to $1.29
individually, so if someone purchases a high quantity of music it would be more effective to
switch to a streaming site.
As streaming sites such as Netflix, Hulu, Apple Music, and Spotify gain prevalence and
popularity, subscribers save money but artists on the sites have varying success. According
to CNBC, in Spotify’s case, legal holders of music may receive as little as $0.006 to $0.008
per stream. These royalties are divided up between labels, producers, and the artists
themselves.
- Political
When Spotify launched its ‘I’m With The Banned’ campaign in July 2017, it was a surprising
sign that the music-streaming service was willing to take political stands – in this case,
against the Trump administration’s efforts to introduce a travel ban covering six
predominantly-Muslim countries.
Spotify used its own data to identify six musicians from the six banned countries, and paired
each of them up with an American musician. The collaborations took place in Toronto – on
account of half the musicians being banned from entering the US – in June 2017.
- Legality
In general, Spotify gets two classes of licenses for the music it distributes: Sound Recording
License agreements, which cover the rights to a particular recording, and Musical
Composition License Agreements, which cover the people who own the rights to the song.
Recording licenses. For the rights to the actual recordings, Spotify has deals with the big
three record labels -- Universal Music Group, Sony Music Entertainment Group and Warner
Music Group. Sony Music also owns more than 5 percent of the company.
Composition licenses. Within this category, there are two main types of licenses Spotify has
to secure: performance rights and mechanical royalties.
Performance rights are generally paid to song publishers, and managed through two main
firms in the U.S. -- BMI and ASCAP. A public performance license is needed when a song is
performed in public -- including when it's streamed, as well as when it's played on the radio
or on TV.

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Spotify is a Swedish company that streams music, video, and podcasts through licensing

Spotify’s Generic Competitive Strategy and Intensive Growth Strategies

Generic Strategy for Competitive Advantage. Spotify applies the cost-leadership generic

Market development and market penetration provide a competitive advantage to Spotify’s

- Local Music, Global Audiences

Spotify has launched a number of highly successful, hyper-localized ad campaigns which

Streaming sites increasingly make subscriptions increasingly more affordable beyond

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