Digital Disruption In Music Industry: Spotify's Success (essay).

Write a report outlining the changes that have occurred in a business due to digital innovation using a work centred analysis approach.

The present report examines digital disruption event, which transformed the digital music industry. Spotify has been the driver of the disruption. Spotify assists the individuals in finding the right music at the right time. The users can access their Spotify account with their computer, tablet, or phone. It was officially launched in 2008 and it provides protected content from record labels and media companies. It provides freemium services, which mean that the basic services are provided at zero, prove whereas additional services such as improved streaming quality and music downloads are provided with paid subscriptions. The users can access their account and they can browse through their music or search by different parameters such as artists, albums, or share their playlists with other users or share it on social media (Nicolaou, 2017). The company pays royalties to the artists based on the total number of songs streamed on the service. Spotify has taken advantage of digital disruption event in the music industry. The report assesses the effect of digital disruption and provides recommendations to address the situation.

The digital disruption in the music industry did not entail new instruments and tools for generating new music but it did include new distribution channels, unique ways of experiencing live music and its impact on intellectual property rights and human creativity. Spotify was one of the first company to monetize the change in the digital distribution model (Divekar, 2016). The company invented a unique distribution model, which can fight piracy, which was at much hype at that time. Music lovers were attracted towards piracy as it offers complete library and a seamless user experience. Spotify has adopted an integrated distribution model as the music and the production are all modular and it is fed from the labels (Clarke, 2015).

The changes that the disruption in technology has brought are discussed in detail in appendix. It has been identified that the disruption in technology has transformed the music industry and the manner in which music is distributed to the audience. The framework analyzed that the digital disruption can create significant changes in the industry. Before the digital disruption, the manner in which the music is distributed and produced differs in a very significant manner from the present case. The recording artists used to come at the studio wherein all the digital music equipment and recording devices are available. The music is recorded in compact discs and DVDs and distributed through traditional retail stores. The distributors and the retail storeowners used to take a commission for distributing the music DVDs or CDs (Refer Appendix 1).

However, the profitability of the music industry declined with the phenomenon of privacy. With the advent of internet, the popular music was recorded and distributed with the help of internet. Several mediators captured the popular music and distributed it through illegal internet mediums. Other than that, these mediators did not give any royalty to the recording artists and the musicians.

The Business Model of Spotify

Spotify banked upon the phenomenon of piracy and internet distribution mediums. It analyzed that that it can distribute the songs or the music in a legal manner through internet. It created a mobile application, which can also be accessed through personal computers or laptops. This application provides customized or personalized music to different users. Other than that, it also provides distribution platforms to novice artists. These artists can create their own playlists and promote themselves to the audience. The users have to pay small fees as they listen to different music. It users are encouraged to use the service and avoid pirated music. The commission of distributors and the retailers is saved which is collected by the company (Refer appendix 2).

In the present times, the digital innovations have transformed several industries. Most of the businesses acknowledge the importance of digital and internet. Internet and information technology has been integrated with the operations of the organizations and it is used in most of the operations. However, several times, it can radically change the operations of the organization and can adversely impacts the current operations of the industry. It is called digital disruption. The digital disruption negatively affects the current operations of the company (Jocobson, 2017). It affects all the business organizations in the industry and the companies have to adapt rapidly to the market changes. Else, it can result in shut down in operations.

Most of the people consider that the disruption in the music industry has been due to the innovation in the music instruments and the manner in which it is produced. Recently, several digital-oriented musicians have emerged who can are using digital mediums to produce good music. However, the digital music development needs creativity and a musical ear. Digital equipment is also used to practice music made by other people.

However, the primary disruption in the music industry is the manner in which it is distributed through different mediums. Spotify has been one of the first company to monetize on this digital change. The company battled piracy and developed a new market for itself. The digital disruption is an innovation, which creates a new market and value product (Business Today, 2013). This innovation has the capability of disrupting the existing market of the product and displacing the existing market leaders.

The current ecosystem of the music is changed and the major market leaders are streaming service providers, which include Spotify, Apple music, and Google music. There have been a series of transformative events or disruptions, which has led to the current form of the industry. There has been a significant revenue drop in the record music industry wherein the revenue dropped from 12 billion USD in 2006 to 7 billion USD in 2015. However, when the figures are looked at closely, it signifies that the revenue from the digital media has increased steadily whereas the revenue from physical device such as music CDs and vinyl has reduced drastically.

Spotify is a technology based company which has disrupted the manner in which the music is distributed. The company can innovate its marketing strategy and differentiate its product with other competitors. The company can follow the below mentioned recommendations to increase its market share:

Impact of Digital Disruption on the Music Industry

The company can provide offline services. Several times, data connection or Wifi services are not available at different locations and the users are unable to access their playlists. The company can offer the customer playlists by charging a little price. They can charge a monthly rent and playlist is accessible through both online and offline mediums.

Another method to increase the market share and retain the current position of market leader is to launch unique marketing campaigns at different marketing channels. The company can use social media marketing strategy to increase its market share. The company should evolve its marketing strategy based on the evolution of the music industry. It should change the manner in which the company communicates with the customers.

It is important that the company develop innovative marketing strategies with different business models. It can be perceived that the internet has been disrupting the global music industry from the last twenty years. The traditional business model in which the music was distributed through retail channels has been replaced by illegal file sharing, download through internet and streaming through online clouds. Therefore, it is important to develop innovative business models, which can keep the market position of the company.

The company can also create new user base by creating tie-ups with the social media sites. The company can encourage the customers to link their social media accounts with their Spotify account. Facebook and Twitter streaming can assist the organization to connect the users in a unique manner, promote their products, and gain feedback through them (Baines Fill, & Page, 2013).

Spotify can also use social media to promote their products and analyze the demand and needs of the customers. The company can also use Facebook to enhance their customer experience.

Social media marketing strategy can also be used to promote new artists and albums to the users. The social media accounts can be used to promote new artists and get valuable feedback regarding their performance. The market analysis can be utilized before releasing unique content developed exclusively for Spotify users.

The implementation plan includes various strategies, which can be used to increase the market share of the previous organization. Spotify also needs to design an implementation plan which can be used to increase the market share and retain its market leadership position. In the following section, an implementation plan has been proposed which can be used to implement the recommended strategies in the organization. It can be critiqued that the company can make alliance with the social media channels including Facebook to promote their content on the channels. It should also design the mobile application in such a manner that it is accessible through offline mediums too. Other than that, the company should also change its pricing model. Initially, Spotify was adopted by the music fans or enthusiasts. These people gave value to the wide variety of music available at small price (Baker & Hart, 2016).

It should also create free account for the users who do not want to pay initially. In this account, the users should be provided different services at a limited manner so that they get habitual of using the services.

Conclusion

It can be concluded that the digital disruption is an innovation, which can disrupt the current operations in the industry. Spotify has disrupted the operations in the digital music industry by changing the music distribution strategy. It has developed unique platform for the music artists to reach out different customers

References

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