Competitive Advantage Identification
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McGill University *
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423
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Information Systems
Date
Feb 20, 2024
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docx
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Uploaded by DeanGoatMaster448
Competitive Advantage Identification:
https://businesschronicler.com/competitors/spotify-competitors-analysis/
Huge user base of 365 million monthly active users
161 million premium subscribers
Has offices in 16 countries across the world
Spotify’s service is available in over 60 countries stretching across: The Americas, Europe, Asia and Oceania
Spotify has many partnerships with major music labels and producers world-wide that gives Spotify the exclusive rights to offer their libraries and services exclusively on their platform.
Spotify’s catalog is one of the largest in the streaming service: containing more the 70 million songs and exclusive access to over 50,000 albums.
Spotify’s greatest competitive advantage is through all the info above^ use the data to reach each individual user: Spotify should be able to continue attracting millions of new listeners and subscribers
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The application can track music preferences in genres and timings
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This tracking is used to target potential consumers and modifies their listening experience so that it suit their individual wants.
Spotify also uses its data to personalize the user experience. Algorithms relying on Spotify's aggregated user data and your personal data can help surface the right content
at the right time based on time of day and user context. That level of personalization is much tougher to copy, and Spotify's scale gives it a distinct advantage in that realm
.
Spotify has been able to use their vast amounts of data, analytical capabilities and AI tools to create a competitive advantage and a superior user experience
Thus, gaining more user engagement. Spotify is striving to engage more and more users from both sides of the marketplace. Moreover, Spotify remains the only player to offer free music with some advanced features.
There are playlists created from the algorithm
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Algorithmically generated personalized playlists o
Rap Caviar/Fresh Finds: Spotify curated content
Another huge advantage is that Spotify is Platform Agnostic
Industry Analysis (
the underlying forces at work in the industry; the overall attractiveness of the industry; and the critical factors that determine a company's success within the industry
)
Spotify operates in the Audio Streaming Podcasting industry. This industry relatively attritive, with high profitability potential.
Players within the same industry: Apple music, Amazon Music, YouTube Music, Sound Cloud and Tidal
Porters Five Forces:
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Threat of New Entrants: Low
The threat of new entrants is low. The reason it is low is due to the over situation of the music streaming market. Companies such as Spotify have such a massive hold on the users constantly gravitating new potential subscribers that it would be too difficult to enter this market and survive.
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Threat of Substitutes:
The threat of substitutes is medium. The whole premise of Spotify was to be a substitute to users who want a personalized listening experience. What makes Spotify unique is the millions of available songs and the unique level of personalization for the user. Unfortunately even with the successful and innovative model of Spotify, the music streaming industry is constantly evolving giving new life to potential competitors to steal users away from Spotify.
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Threat of Rivalry:
The threat of Rivalry is medium. The closest competitor to Spotify is Apple music. Apple is a household name have one of their devices present in hundreds of millions of homes. A key difference between Apple music is that Apple music is solely available on their products unlike Spotify who is product agnostic.
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Threat of Bargaining Power of Buyers:
The threat of buyer power is low. The reason for the threat being so low is due to the format of Spotify’s subscription service and the amount of control Spotify has of their platform. Spotify initially offers a free subscription option but this comes with routine advertisements that interrupt the flow of the user’s playlist. This motivates the user to upgrade their free subscription to the Premium subscription.
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Threat of Bargaining Power of Suppliers:
The threat of buyer power is low. From the artist’s perspective there is no
reason to not place their product on Spotify. Spotify offer so much to any artist who decide to place their music on Spotify. The reach that each artist will have is huge because of the massive number of users and the algorithmic features of Spotify that is constantly offering the user new music to discover.
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