The Spotify business model and its patterns. Article on the Business Model Navigator website. 

Read the article: https://bit.ly/3gIEFIs

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Podcast host: Alexis Brion Gut, innovator and business strategist. Connect & Follow: www.linkedin.com/in/alexisbrion/

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Transcript:

Spotify launched their music service already in 2008 and as of October 2020, the platform has 320 million monthly active users, including 144 million paying subscribers.

Here some key elements of the Spotify business model:

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.

Made for Mass Customization: Spotify creates millions of playlists that are customized to the individual customers. These include for instance ”Release Radar”, a playlist personalized to the music taste of the respective user.

Rent Instead Of Buy: On Spotify, users are unable to purchase individual songs or albums. Rather, they gain access to all songs on their platform for a flatrate, monthly fee. Access is granted based on the membership and not via a purchase, making music consumption more flexible for customers.

Spotify operates in a Two-sided Market: it maintains close relationships not only with it’s customers, but also with a set of crucial stakeholders, the rights holders of the content. It distributes approximately 70% of total revenue to rights holders, who then pay artists based on their individual agreements.

Freemium, mass customization, renting instead of buying and big revenue sharing: can you innovate and imagine these features in an another business?

Read more in the Business Model Navigator website.