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A music industry innovation

Jordan Hayward

on 18 October 2013

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Transcript of Spotify

Opportunity Identification/ Selection
The need was seen by two very intelligent and in tune individuals who had the ability and foresight to be able to act on it.
Concept Generation
Concept/ Project & Development Evaluation
2005 - MOG, iTunes, Yahoo Music, Pandora Radio

In the Digital music realm there are two Business models currently being used in relation to the sharing of music. licensing model and ownership model.

Spotify approached major labels, Warner Music Group, Music, EMI, Sony, Universal
to sign licensing contacts
The brand name literally came from the words 'Spot' and 'Identify'

Creating relationships with other companies.

Positioning themselves as convenient universal across all platforms as long as they are connected to the internet.

The Future
The Idea
Listen everywhere
- industry-backed alternative
- "The only viable way to beat them"
- "A great-big jukebox in the cloud"
"Business model viability?"
Revenue -
$576 Million

Expenses -
$577 Million
Byrne, S., Thorkildsen, J. (2009). ‘55 100 avspillinger ga 19 kroner"’ Dagbladet.
Referenced from: http://www.dagbladet.no/2009/08/11/kultur/musikk/spotify/musikkbransjen/emi/7607953/
Dredge, S. (2013). ‘Thom Yorke calls Spotify 'the last desperate fart of a dying corpse'
Referenced from: http://www.theguardian.com/technology/2013/oct/07/spotify-thom-yorke-dying-corpse
Dung, E. (2009). ‘Uggla furious over Spotify’ Aftonbladet.
Referenced from: http://www.aftonbladet.se/nojesbladet/musik/article5637161.ab
Emerald Group Publishing Limited. Strategic Direction, ISSN 0258-0543, 2013, Volume 29, Issue 7, pp. 25 – 27.
Referenced from: http://www.emeraldinsight.com.ezp01.library.qut.edu.au/journals.htm?articleid=17090530&show=abstract
Guttenberg, S. (2011). ‘Is Spotify unfair to musicians?’ CNet.
Referenced from: http://news.cnet.com/8301-13645_3-57540964-47/is-spotify-unfair-to-musicians/
Investor’s Business Daily. (2012). ‘Spotify rolls free mobile radio’. Investor’s Business Daily.
Referenced from: http://search.proquest.com.ezp01.library.qut.edu.au/abicomplete/docview/1021053169/1400E7269CE3D80ED15/1?accountid=13380
Lindvall, H. (2009). ‘Behind the music: The real reason the major labels love Spotfy.’ London: The Guardian.
Referenced from: http://www.theguardian.com/music/musicblog/2009/aug/17/major-labels-spotify
Makarechi, K. (2012). ‘Spotify isn’t fair to artists’ Entertainment
Referenced from: http://www.huffingtonpost.com/2012/03/28/black-keys-sean-parker-spotify-asshole_n_1384882.html
McCarthy, B. (2013). ‘Ford in deal to integrate Spotify’ FT.com.
Referenced from: http://search.proquest.com.ezp01.library.qut.edu.au/abicomplete/docview/1312446390/1400E7B69B97C859B02/4?accountid=13380
Mlot, S. (2013). ‘Ford, Spotify team up for in-car music streaming’ PC Mag
Referenced from: http://www.pcmag.com/article2/0,2817,2415821,00.asp
Mullin, J. (2013). ‘Spotify sued over playlists, said to infringe copyright’ Ars Technica.
Referenced from: http://arstechnica.com/tech-policy/2013/09/spotify-sued-over-user-playlists-said-to-infringe-copyright/
Penny, L. (2011). ‘The old protest playlist won’t do for the Spotify generation’ New Statesman
Referenced from: http://search.proquest.com.ezp01.library.qut.edu.au/abicomplete/docview/900906610/1400E7571DF16871844/8?accountid=13380

Current Innovations
• 1st connected car appearance – Ford, 2013

• Currently integrated with the Sync’s voice command system in Ford vehicles in the US, Europe and Australia.

• Ecosport – 1st car to use the new technology

• Simple voice commands:
• “Now playing”, “Add track to playlist”, “Shuffle on”

• Audio controls allow drivers to: skip songs, play/pause, and program the preset radio stations

• Send playlists to friend’s Spotify Inbox

• Applink voice control technology - 100% accuracy.


• Will the artists, agents and labels continue to make money?

• Demise in CDs and MP3 files

Rise in music streaming services - Analogue reach end of product life cycle.

• Revenues - remain stable at around $5.5 billion a year.

• Increase in digital downloads and streaming services compensates for decline in hard copy sales.

• Hunger for music remains strong

• Music labels start to take advantage of digital sales.

• Retail margins and promotional costs declining: Good for labels, detrimental to retailers.

• Accused of failing to compensate artists fairly

• Sales ending up in proverbial ‘black box’

• Major labels receive 18% of Spotify shares, and artists receive next to nothing.

• Indie Labels – no advance & no minimum per stream

• Musicians pulling music from Spotify

• Some receiving ‘what a mediocre busker would earn in a day’

• Labels have earned US$3.00 after artists were streamed over 55,000 times.

• Patrick Carney of Black Keys: Spotify isn’t fair to artists, and streaming services are not a feasible option.

• Spotify – sued in 2012 by Ministry of Sound - user playlists infringing on copyrights

• Yorke: What’s happening in the mainstream is the last gasp of the old industry.

New Product Concept
New Product
Daniel Ek
Founder of Advertigo joint founder of Tradera and Evertigo.
CTO at Jajja Communications, CTO at Stardoll and CEO of µTorrent

Martin Lorentzon
Co-founder of TradeDoubler

Increases in technology
Communication Infrastructure
Increased number of personal computing devices
Increased mobility of personal computing devices
Advances in Cloud technology
Increased piracy
Limited storage
Individuals wanting to listen to their favorite music on demand
Technological advances have allow for increased efficiency in programming and globalisation has allowed for greater reach of markets ...
On 7th Oct 2008, paid subscription of Spotify was launched to the public. Free accounts were available via invitation only, these came with a limited number of invitations. Still only in Europe.
Public Free accounts were offered in the UK on 10th Feb 2009.

US on 14 July 2011
Germany on 13 March 2012
Australia and New Zealand on 22 May 2012

With approx 20m songs, they are the largest
Before launch, Spotify sent out exclusive beta invitations that were geographically restricted to Sweden, France, UK, Spain, Netherlands, Finland and Norway.
40 Billion songs were downloaded in 2008
95% of these were illegally.
Which is an estimated 48 Billion $$ in lost revenue
Universal ability for apps and programs on varied platforms
Innovation Schedule
Ek’s idea: Anyone should be able, legally, to listen instantly to any song at any time.

Have achieved a 265ms streaming time
Andrew Dumont - writer for Moz Analytics
Full transcript