BCom Case Competition
- 1. SPOTIFY By: Vitamin SEA Aditya Saputra, Adrian Darmali, Allan G. Pangaribuan, Somya A. Wirawidia How to increase Spotifys presence in a crowded digital music streaming industry
- 2. To bring music into every part of your life, wherever you are, whatever youre doing, whatever your mood Daniel Ek Launched on September 2008 49% of market share in the global market 15m subscribers & 60m active users (end of 2014) Introduce an alternative to music piracy; music streaming Spotifys vision has been consistent ever since its release in 2008, with increasing number of subscribers. Introduction Recommendation Financial Impact Implementation Conclusion
- 3. Market leader within the digital music industry Globally, loss increase annually 59.9% (2010- 2011) Profit from countries with high internet connectivity (established market) offset initial loss from new market Advertising as primary revenue Introduction Recommendation Financial Impact Implementation Conclusion Although revenue in some countries increases, loss in other countries offset the effect, yet the market value still reflects its position as the market leader. Market Value: $6.2 billion
- 4. Introduction Recommendation Financial Impact Implementation Conclusion The digital music industry has been growing in sales from 2004-now
- 5. Introduction Recommendation Financial Impact Implementation Conclusion We aim to increase market share by using data as a leverage to further increase users engagement, conversion rate, and in turn conversion rate. We name the program, SpotiX. Artists Users UsersArtists Users play an artists playlist a certain number of times Artists give notification of upcoming concert, giving early access to the tickets sale Free Subscriber Artists give notification, offer tickets to those who have frequently played their playlist Offer concert tickets bundle with 6 months premium service Offer cheaper tickets and exclusive feature Premium Subscriber
- 6. Introduction Recommendation Financial Impact Implementation Conclusion We aim to increase market share by using data as a leverage to further increase users engagement, conversion rate, and in turn conversion rate. User engagement By connecting artist to listener, Spotify will engage their customers even more. Conversion Rate Brand Loyalty Increase in user engagement will result in an increase in conversion rate from free user to premium user With the sense of belonging and increased connection to their favorite artist, people will develop more affinity to Spotify. Increasing switching cost to other providers Provide connection from artists to users, eliminating the one- way relationship
- 7. Introduction Recommendation Financial Impact Implementation Conclusion An implementation of the program will lead to a change in the model, from one-way relationship to a more direct three-way relationship Three-way relationship Artist Artist Artist Record Label Users Artists One-way relationship
- 8. Introduction Recommendation Financial Impact Implementation Conclusion Risks such as elastic demand, non-cooperative artists, & copycat may arise in the market, and some mitigations steps can be undertaken Elastic Demand Music For Everyone, From Anyone Big hit artists under recording companies would not be interested in doing the program Intellectual Property Theft New features of SpotiX Create stronger brand equity Positive associations of Spotify Perceived as Spotifys appreciation towards art by streamers SpotiX Differentiation Prioritize on gaining partnership with up and coming artists Brand Loyalty Establish emotional connection with streamers
- 9. Introduction Recommendation Financial Impact Implementation Conclusion The financial impact of SpotiX will approximately add AUD 232.8 million of revenue per year, AUD 19.4 million per month. Australias population: Approx. 24 million 7.2 million people go to Music Festival/Co ncert 5.4 million people who go to concert do not use Spotify New 1.62 million user AUD 19.4 million/mo nth AUD 232.8 million/yea r 30% 75% 30% x AUD 11.99/month x AUD 143.88/year
- 10. Introduction Recommendation Financial Impact Implementation Conclusion Implementing the SpotiX strategy through partnership with artists and label companies Provide customer support and incentives Communicating the program through multi channel means, both online and physically Imbuing as much as Spotifys core values on SpotiX Creating accessible and user friendly online platform for SpotiX Establishing partnership with artists, label companies and promoters 0 10 20 30 40 50 60 70 80 90 Nov-10 Apr-12 Aug-13 Dec-14 May-16 Sep-17 millionsofusers Spotify User Forecast Premium user Monthly active user user
- 11. Introduction Recommendation Financial Impact Implementation Conclusion SpotiX would be a strategic solution to compete against Apples growing market share. With SpotiX, Spotify users can perceive increased value in its product Through SpotiX, non-Spotify users are attracted to convert. Increase in conversion rate Increased perceived value results in brand loyalty Increase in market share Increase in future sales
Editor's Notes
- #8: http://www.hypebot.com/hypebot/2015/02/why-music-service-prices-are-falling-and-cant-get-back-up.html