Blue Ocean Strategy – Spotify Differentiation -Music Streaming instead Downloading

Spotify transformed the music listening of customers who were earlier paying for downloading music and listening on devices like ipods, mobile phones, tablets, etc. by the way of unlimited music streaming online there by creating an uncontested market space and capturing new demand.  The core strategy lies at providing the consumers platform that allowed them unlimited streaming free of cost and also using advanced analytics for creating the playlists according to consumer choice and mood. Riding on the improved internet connectivity and speeds that are at core for the Spotify platform to streaming music, Spotify captured the market with not only offering unlimited free music but also focusing on the consumer experience of listening to high quality music.

Value Innovation – ERRC Grid Spotify

Spotify eliminated the need for paying to buy for music either for individual tracks or music albums by offering free of cost and also need to invest in devices like iPod, etc. Spotify reduced the need for consumers managing the music by providing with music library of old and current music, search, genre-based shuffle and perfect sound quality. Moreover, with premium service consumers playlist creation, offline streaming, enhanced sound quality. Spotify raised the consumer experience to new level by offering connectivity of consumer accounts to any device, social media networks where consumers can create instant playlists, access other people’s playlists and collaborate on playlists no matter the location. Spotify raised the sound quality and experience for the consumers through software innovation.

Spotify created a new uncontested market and new demand as highlighted by more than 83 million users paying a monthly fee to play music in the home, shops, cars and offices. Spotify has created a platform that was highly convenient for the consumers not only to buy but also listen and share music. Spotify also uses the customer data for analysing the behavioural patterns of consumers and customize the offerings accordingly. Spotify has created a unique brand and value proposition that significantly created brand loyalty among the subscribers.  

Spotify Losses

Spotify has made huge upfront investment in the music platform for streaming, brand design, music content by paying artists hoping to make money through premium paid services and the ad revenues from the free service. Spotify has close to 200 million users on its platform and only close to half of them are premium subscribers. Due to this Spotify is facing losses and also facing stiff competition as the streaming is no longer blue ocean but a red ocean where the competitors like Amazon, Google  and Apple have their own devices like Alexa, Echo and Home pod that also stream the music and these speakers create  a significant advantage which Spotify lacks. Spotify struggles in Red Ocean can be attributed to lack of value innovation which it initially delivered.