Spotify has contributed immensely to the music industry, with it’s freemium business model that has attracted millions of subscribers to try and pay for the music they listen to, which has reduced piracy considerably. Although the service is not available to many countries at the moment, the Spotify Business Model has an upper hand over many others, owing to the huge number of features available as well as the delivery of music with no delay or latency.
Spotify was launched in 2008 in Sweden, as a music, podcast, and video streaming freemium service which provides free streaming of rights managed, protected material in its free plan while additional features like improved streaming quality and music download are offered to users who would rather pay for the monthly or yearly subscription packages.
How Spotify Business Works
Spotify can be gotten on almost every operating system and works just like any other SAAS with all of its data stored on the servers. But the server load is minimized and the user is offered a no-delay service by saving the temporary encrypted version of the recently played songs in the user’s system as the cache.
When it comes to the business angle, Spotify purchases a license from labels, publishers, artists, as well as other right holders to stream the music on its platform. Spotify uses a very complex algorithm in determining the royalty per stream to be paid to these artists. Note that not all right holders and artists are entitled to the same royalty fees. The royalty fee depends on the contracts, country in which the song was played as well as the currency value in that country. On average according to Verge, the royalty “per stream” payout to rights holders is somewhere between $0.006 and $0.0084.
Spotify Business Model
Spotify Business makes money through a freemium business model strategy, through paid subscriptions and advertisements. This business model is a simple one and works just like any other freemium service such as Youtube, MailChimp, etc. Premium subscriptions are the main source of revenue where advertisements and download limits are removed and the song bitrate is increased to 320 kbps.
Spotify business offers three different subscription types:
Spotify Free Version
Of the three versions, this is the most basic. Choosing this version gives you access to all the content but with certain restrictions which includes a lot of advertisements, no option to listen to songs while offline, shuffle only access, and limitations on the quality of the tracks played.
For this category, the application is priced at $9.99 per month. The premium is free from all the limitations of the free version.
The benefits of Spotify Premium include:
- Unlimited high-quality streaming access to over 30 million songs.
- You can play music without an internet connection.
- Travel abroad with your music.
- Use Connect to play Spotify via your speaker, TV, and car.
- There’s no ad interruption.
Above are the features you stand to enjoy with a premium account.
The Family version was released by Spotify as a premium subscription for the people living at the same address. The Family premium version offers all the premium features to up to six people living at the address at a total cost of $14.99.