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In this assessment you will review and assess various dimensions of an innovative product or service. Researching different cases of innovations are useful for understanding some key elements of innovation.

Write a real-world critical appraisal of an innovative product, process or service undertaken by one of the business organisations, government organisations or entrepreneurial start-ups of your choice. You should choose your own case for this assessment and there is no set structure but you are expected to draw on a range of academic texts and to provide a complete and accurate reference list. It is important that you evaluate different dimensions and features of the product/ service and provide an assessment of the innovation and its impact on business and society and provide creative recommendations and alternative options for the future improvement of the innovation. Additional information and examples will be provided during tutorials.

What needs to be covered:

  1. Introduce the chosen product or service/process and the reasons for selection of this innovation – 
  2. Product /Service Information –. Clearly explain background/history, characteristics and features of the product/service.This should be a non-technical description that any manager could understand.
  3. Evaluation of Innovation – (around 1000 words). Use and apply relevant innovation concepts to evaluate the product/service and to address the strengths and weaknesses of the product/service. Depending on the chosen case, you may emphasis and analyse relevant critical issues such as business development, commercialisation or marketing issues, and the overall impact of innovation on human behaviour, business activity/growth and on economy/society as a whole.
  4. Recommendations for future improvement and development – Based on your analysis, offer a few key recommendations for the possible future product/service development or other relevant innovation projects that may expand the application of the product/service and its market.

The Rise of Spotify

Innovation comes from many sources and can take many different forms in the due course of time. Different innovations are responsible for creating different opportunities for society. They create multiple sets of demands for the producers as well as the consumers. Innovation in business refers to ideas that are commercially exploitable (Yoo, Boland, Lyytinen, & Majchrzak, 2012). A commercially successful innovation will create or add value by improving existing commodities, services and processes or of developing a new product, service or process that create value of no pre existence.

Founded by swedish innovators Daniel Ek and Martin Lorentzon Spotify is a music streaming service that was officially launched in october 2008 all across Europe. It derives its concept from the peer to peer file sharing service and revolutionised the digital industry of Music. In this case Study there will be a detailed discussion on the innovativeness of Spotify and how it keeps in touch with the already established services like Pandora, Last-fm and Imeem, its current Business model and the frequency of new innovations necessary for the company to keep Growing (Edvardsson & Tronvoll, 2013). This Study will also deal with the challenges the company will face from other companies and the music industry itself.

Headquartered in Stockholm, Sweden, Spotify is a freemium service that provides users with DRM- protected content from media companies and record labels. The basic features of the application are free with limitations and advertisement while features like improved quality of streaming and downloading content are offered to paid subscribers. The service is available in most of Europe, the Americas, Australia, South Africa, New Zealand and parts of Asia. Most modern devices like windows, linux, macOS, iOS, android and windows smartphones support can be searched and browsed for on the basis of parameters like Artists, albums, genres, record labels and Playlists (Björkdahl, & Holmén, 2013). Users have the options of creating new playlists, edit them and share them on different social media platforms like Facebook and Twitter. The service provides its users with access over 35 million songs.

With the arrival of the first wave of music streaming services the revenues of the global music industry declined by 40% from 23.8 billion dollars in 1999 to 14.3 billion dollars in 2014. They facilitated illegal Digital distribution and piracy. The streaming model can be considered as an essential driver of the inflection point of the music industry. The industry reached its highest annual growth rate in 20 years in 2016 (Rayna & Striukova, 2016). The revenue of spotify represents 30% and 42 % of the market of global music and the market of streaming respectively.

Spotify's Business Model

The adoption of services like music streaming in the mainstream market aligns itself perfectly with several other technological trends of the consumer. Online streaming services mostly provide on demand access to their data without the need for downloading. User data is leveraged by the company to better understand the users needs and thus recommending personalized content which in turn increases servis and user engagement (Sedera, Lokuge, grover,, Sarker, & Sarker, 2016). These streag services also unbundle different albums so that the songs can be repackaged into personalized playlists. The introduction of Spotify created a disruptive consumer musc product. The company currently has 83 million paying customers and 180 free users spanning across 65 markets. The company has transformed the music listening experience for a consumer by offering an unprecedented amount of convenience data driven personalization and accessibility to engagement and drive discovery (Fenema, & Keers, 2018). The service filed for a direct listing at the New York stock exchange on February 2018 and their shares started trading on April 2018.

The business model of spotify has successfully served its its purpose till date but being in ultra competitive market of music streaming service constant innovation is the key to holding its position in the market. The business model will require restructuring at a drastic frequency to maintain elevated standards of its industry. The business model that is already in place needs to be reviewed on a regular basis with new innovations coming into the light every single day. Companies either need to mbrace these revolutions and merge products accordingly or introduce some of their own. Spotify is a perfect example for this concept (Jahanmir, & Cavadas, 2018). The concept of sharing files and streaming music has been around since the last two decades with piracy sites like PirateBay, Limewire and Napster.

Distribution of music has changed dramatically since the revolution and innovation of digital music. And this change is being driven to new heights by spotify as they offer their users with he freedom of listening to unlimited music at anytime and providing a rate that is very competitive to its rivals. The music streaming distribution model was broken for a large period of time and spotify bridged this gap between artist and fans and reduced piracy at the same time. Though Spotify is at the peak of its success its present product value is bound to expire as every product does have a fixed cycle of life. It has to innovate effectively and with regularity to ensure that it stands the test of time.

Competition and Future Outlook

Today Spotify accounts for 40%of the global streaming subscriber base with 137 million users. It primary competition are technology incumbent giants like Apple, Amazon and google who are looking for supplements for their services. They also compete with ventures who are more focused musically like soundcloud, pandora and Tidal. Their success in bot free and the payed market has ensured that they dominate in both the fields. It has grown from 39% in total revenue and 38% in premium revenue in the year 2017 thus resulting in 45% 2 year CAGR for total revenue growth. The primary source of monetization for Spotify is their premium users who can account for an estimated 90% of their revenue.Remaining 10% generates from ad support.

In the december of 2013 spotify Launched Spotify for artists and explained the workings of its business model and date on revenue. The content on spotify is gained from large record labels and Independent artists and the company pays the royalties to the copyright holders for the music that is streamed. 70%of its total revenue is paid to the copyright holders. It also states that they do not have any fixed per-play rate, but instead they consider factors like the home country of the user and the royalty rate of each artist (Hänninen, Smedlund, & Mitronen, 2018). Such holder of rights were paid around .006 dollars to .0084 dollars per play.

Spotify encourages listeners to pay for their music as the subd=scriptions are their main revenue source. Once subscribed spotify removes ads and other limitations and increases the bit rate of the songs to 320kbps. Unlike buying CDs streaming does not consist of a on time payment but thousands of streams happen every day thus quickly multiplying the revenues that are being offered and making it a long-term source for artist income.

  • Spotify has harnessed the full applications of social media platforms and increased distribution and effects of drive network.
  • It has diluted existing models for new and innovative ones that are more aligned with the needs of the consumer
  • It has introduced new paradigms while facing great challenges and uncertainties in large markets.
  • The growth oriented nature of the application is directly related to the nature of the consumer of the basis that the user id is accustomed to the fact that the users of the application dwell on the hours of midnight and the personalities who are greatly depend on personalities who may as well guide new innovative companies to success.
  • The growth oriented feature of spotify which may be defined as the creatures that define successful attributes like the aggressive attribution of preferred artists but users on platforms like facebook will be rapidly categorised and the overall market value of each product will be increased or decreased according to the market price of the product of value that is  being provided to the user will be and in correct measures be accounted and thu ata sensiti will be taken into account to create a better amount data oriented accounts that will provide a depth oriented feature of spotify that takes into account, the data that will be used by the users creating playlists over a bundle of songs foreplayed in continuation.
  • Since the launch of this application in 2008 there has been primary point of criticism for this service. centres around artists around the consumers will behave in an unsustainable manner because for them the sustainability of heir establishment is primary whereas for the clientele. the use of random memsed income deberitdistrubers in different forms payment may ultimately result in a more platform based
  • Spotify on a basis daily usage terms by users have been derived as many significant criticising authorities that Artists, composers and copyright holds a certain amount of market share and thus if the composition is private and does not will to have a distribution of their they can limit the music usage and the copyright protection will be withheld.
  • Though it has put a legible withstand to the illegal usage of copyright music still, we find the are illegal distribution of music and thus it need to be cured by distributing music on a day to day basis by a peer to peer networking system.
  • Facilitating piracy and illegal distribution of copyrighted music application of the first wave of music redistribution destroyed the revenues of the global music market by figures that well economically dramatic.
  • From the year 2011 to 2017 the category of music streaming service became primary instead of being a secondary form of service because of spotify’s primary form pf streaming service.
  • Spotify has faced a number of issues regarding the service it provides. Most of which has come for different consumers who have different innovations and have financial and market discount which had not been fulfilled as of uncertain free with what our eyes have provided in multiple .sessions
  • Multiple Critiques which were quite harsh have been provided by different artists for the scheme of payment by Spotify as there had been some individual agreements.

In an existing new market for music services that will provide option to already existing notions the user base for Spotify needs to grow substantially with the merging of new innovations.

Spotify took this innovation of p2p file sharing, streaming, online purchasing and formed a package that was simple yet effective. It provided the user with a platform for interaction with their preferred choice of music freely but not actually owning it. Spotify operates on a freemium model of business thus enabling ts services to reach out to a huge amount of customers, as its value increases gradually over a certain period of time. Revenues grew a whopping 45% from the year 2009 to 2010 (Tumbas, Berente, & Brocke, 2018). It proved that the freemium model of business played a huge part in making spotify achieve such a massive growth over a short period of time. Though there are some revenue loses as spotify needs to pay a huge amount to record labels in royalties thus enabling them to stream music for users. The loss in revenue grew from 16 million dollars to 26.5 million dollars by 2010.

Monetization and Revenue Model

The platform for interaction between the artists and the users needs to be improved sos as to become more friendly and user interactively friendly bArs and paid subscribers (Johansson & Kullström, 2018). Between the freemium and subscribed users the service needs to differentiate and provide an equal amount of benefits so as to ensure that both the paid and unpaid versions remain relevant in the mind of the user


In an ever streaming service changing environment of the economic internet, a streaming service for music called Spotify has stood out as an innovator and has quickly risen to lead an industry n the streaming of music. This was based on largely user profiled business model that gave a huge value to preferences to music and its monetary value. We find ourselves in an economy were the rise of companies are rapid and are quite largely dependent on user experience. And thus we can conclude that the model of business used by spotify certainly merges with new ideas that meets the ever changing needs of the audience.


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Edvardsson, B., & Tronvoll, B. (2013). A new conceptualization of service innovation grounded in SD logic and service systems. International Journal of Quality and Service Sciences, 5(1), 19-31. Retrieved from

Frishammar, J., Cenamor, J., Cavalli-Björkman, H., Hernell, E., & Carlsson, J. (2018). Digital strategies for two-sided markets: A case study of shopping malls. Decision Support Systems, 108, 34-44. Retrieved from

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Sedera, D., Lokuge, S., Grover, V., Sarker, S., & Sarker, S. (2016). Innovating with enterprise systems and digital platforms: A contingent resource-based theory view. Information & Management, 53(3), 366-379. Retrieved from

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van Fenema, P. C., & Keers, B. M. (2018). Interorganizational Performance Management: A Co?evolutionary Model. International Journal of Management Reviews, 20(3), 772-799. Retrieved from

Yoo, Y., Boland Jr, R. J., Lyytinen, K., & Majchrzak, A. (2012). Organizing for innovation in the digitized world. Organization science, 23(5), 1398-1408. Retrieved from

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