!All the Music, All the Time

!!G1 : Team 3

Sikha Bagaria | Malay Gala | Piotr Kanonowicz | Goh Hao Xuan Bernard | Joash Yeo ZhongJie !!!

�1

Prepared for Bala Shankar MKTG 204 - Services Marketing AY 2013-14

A marketing approach to Music Streaming Services & Spotify

Overview The Music Market: at a Glance 3 Digital Music 3

Streaming Music 4

Spotify: The answer to the digital music streaming 4 Industry & Company Analyses 4 Strengths, Weaknesses, Opportunities and Threats: 4

Porter’s Five Forces 6

Spotify’s Service Blueprint 8 Service Recovery Policies 9 Spotify Service Standards 9 Analysis of Findings 11 Service Gaps 11

Hard and soft customer defined standards 13

Recommendations 16 Better communicating the way Spotify pays artists 16

A Better Pricing Strategy for Music Lovers 17

Growth Strategies 19 Audiobooks-on-demand 19

Education-on-demand 19

In Closing 21 References 22 Appendices 23 Appendix A: Consumer Survey Question Set 23

�2

The Music Market: at a Glance There has been a huge transition in the music market, from physical music in the form of CDs to downloading songs into MP3 players to, now, very widely adapted, streaming. The sales of physical music in the form of CD’s have been plunging over the last decade. As of 2012, the physical music market lost nearly a third of its volume (IFPI 2013: 7). Studies have also shown that downloads have also been decreasing yearly. So far this year, 1.01 billion track downloads have been sold in the United States, down 4% from the same time last year, according to the tracking service Nielsen SoundScan.

Digital Music The market share of digital music has risen by 22 percent (US$ 4.2 bn) in 2008 to 57 percent (US$ 5.8 bn) in 2012. Figure 1 gives us a clearer picture of how the digital market has been taking over the phonographic industry. The parts of the bars which are highlighted in red denote the percentage sales of digital music in the phonographic industry.

Figure 2 reveals that music listeners have decreased music downloads. Thus, downloads do not contribute much to the revenue of digital music, and streaming has taken over. Streaming services has grown by 62 percent from 2011 to 2012 according to the current IFPI report (2013: 24).

!!

�3

Figure 1: Recorded music sales(CD, Digital, Vinyl) in the US (2000-2012) Source : Recording Industry Association of America

Figure 2: Yearly change in online music revenue by type Source : Strategy Analytics Global Recorded Music Forecast 2012

Streaming Music Last year, streaming and subscription services generated $1.03 billion in revenue, up 59 percent from the year before, according to the Recording Industry Association of America, and many of these providers are reporting robust growth this year.

From Figure 3 we can see that the sales share of subscription and streaming services in the digital music market was 25.5 percent in 2012. Music streaming services have thus, started playing a more important and crucial role in the music industry. It is now responsible for the changing industry environment.

!Spotify: The answer to the digital music streaming Spotify is an online digital music streaming service that promises users access to their favorite music on all their digital devices. It claims to be the first social digital music experience, with a deep integration with Facebook, which users can use to share their favorite songs and playlists with their friends.

Spotify was founded by 28-year-old Daniel Ek in 2008 and currently boasts 24 million ‘active’ users and 6 million paying subscribers. It also carries a database of 24 million songs with 20,000 songs added every day. Spotify is currently available in 32 countries.

In the online music streaming service industry, Spotify’s closest competitors include Pandora, Beatport, SoundCloud and Rdio.

Industry & Company Analyses Strengths, Weaknesses, Opportunities and Threats: Strengths: 1. As evidence of its technological prowess, Spotify boasts a superior user experience, based on a user-friendly interface, available on both online and offline platforms.

�4

Figure 3: Streaming music sales in the US (2000-2012) Source : Recording Industry Association of America

2. Spotify also uses streaming advertising as a revenue source, just like YouTube. Advertisements are placed before the actual streaming of songs begins. Revenue from this source is shared between Spotify and the artists who choose to upload their music to the site.

3. As opposed to downloading music using online torrents or file-sharing websites, enjoying music on Spotify is a completely legal process. Users can also enjoy music without having to download the files onto their devices.

4. A deep integration with Facebook and the ability to share music extended to users provides Spotify with essential advantages over competition and helps it make digital music a social experience.

Weaknesses: 1. Spotify’s low royalty rates discourage artists from uploading their music to the site. In the UK, on average, Spotify’s royalty rates award about 0.4p to an artist for every play of their song on the site. At this rate, it would take 250 plays of a single song to earn the artist a sum of £1. In contrast, the iTunes Store awards artists 10 cents for every download of a 99 cent song, which means the song need only be downloaded 10 times to earn the artist a sum of $1. Consequently, the Spotify music library is quite limited with respect to popular artists.

Opportunities: 1. Higher internet connection speeds worldwide encouraged the shifting trend from downloading to streaming videos and movies online. This trend opens a new avenue for people who like to enjoy their content online, without having to download it. Following online video streaming, the streaming of music online is a paradigm-shift in the way people enjoy music and has opened a lucrative, quickly growing market for online streaming services.

2.The advent of smart devices like smartphones and tablets has also encouraged the proliferation of applications (or ‘apps’), versus the previously used software programs. Apps feature shorter download times and easier usability to people with smart devices, along with easy access to the internet and simultaneously running multimedia apps.

Threats: 1. Competition from other streaming services like Beatport, SoundCloud and Rdio is a major source of competition for Spotify, as they all operate in the same industry. The differentiation of service design and delivery is the only way to gain a competitive advantage and as such, a limited music library could be a huge liability.

�5

The iTunes Store, due to the vast popularity if iOS devices, is also a huge competitor, albeit in a slightly different space.

2. The greatest challenge for players in this industry is to attempt to function as a profitable business whilst trying to fulfill the needs of consumers who hitherto have been accustomed to downloading and enjoying music for free or from trusted sources like the iTunes Store.

Porter’s Five Forces Competitive Landscape: As an online music streaming website, Spotify faces fierce competition from other services in the same space such as Beatport, SoundCloud and Rdio. Spotify is currently a leader in this particular market, but its position as leader might be in jeopardy, given the limited nature of its music library. In this particular industry, it would seem that the service that provides the best royalty rates for contributing artists will have the best library, and thus have a competitive advantage over the others.

The iTunes Store, due to its vastly popular and pervasive nature, also poses a form of competition by providing easy and legal downloads of digital music to most laptops and smart devices.

Bargaining Power of Suppliers: In the context of an online music streaming service, the major suppliers for Spotify are the contributing artists who choose to upload their albums to the website and earn revenue through it. World-famous artists and music icons vastly influence the collection of music available online. Whilst Spotify is a great place for new and emerging artists for promoting their music, established and popular artists indirectly influence the service delivery by choosing whether or not to upload their music.

Bargaining Power of Buyers: Spotify’s customers are people who listen to music on their laptops and/or smart devices, with an internet connection. The key challenge of operating in the industry of online music streaming service industry is to function as a sustainable and profitable business model while catering to consumers who were previously accustomed to acquiring their digital music through free, albeit illegal means. While the legality of Spotify is attractive, whether or not a vast majority of consumers will agree to pay money for streaming music online is still questionable.

!

�6

Threat of New Entrants: By virtue of functioning online, Spotify and similar services have the advantage of being accessible anywhere, as long as an internet connection is available. The downside of being an internet organization is that the low barriers to entry might allow new entrants to set up in the same space quickly and cheaply. The advent of the world wide web makes e-commerce businesses easy and affordable to set up and run, and anyone with a unique business idea and web-designing skills can set up in any industry.

Threat of New Entrants: As Spotify and other online music streaming services are the latest phenomenon in the way we enjoy digital music, there is little threat to be expected from any other products that function on a lower standard of technology. While competition from the iTunes Store still remains, it is unlikely that any other products will pose a threat to Spotify and its competitors unless they are built on a more futuristic technology. Even among its competitors, Spotify’s easy and familiar interface gives it a decided advantage.

!

!!!!!!

�7

Spotify’s Service Blueprint

The blueprint of the service is based on our personal interaction with the service and research on the company’s processes. We found that there is minimal physical evidence for this application and the only physical evidence is the smart device that the listener uses to access and use Spotify.

Users can download the application; purchase a premium account as well as a voucher. These are the actions that the users are expected to carry out in order to experience this service. Spotify says that above 20% of its users purchase the premium account.

Spotify has various backstage department personnel who help to maintain the website and service it. They also have customer service personnel who reply to customer queries and concerns promptly. The application development team are constantly adding new songs into the spotify database for listeners and enhancing their user experience.

�8

Figure 4: Service Blueprint of Spotify

Smart&Device&

Downloading&applica3on&

Purchasing&premium&account&

Website&

Purchasing&Voucher&

Website&service&

Line&of&interac3on&

Line&of&Visibility&&

Customer&Service&

Physical&evidence&&&

User&Ac3ons&

Onstage&Contact&

Backstage&contact&person&Applica3on&development&

team&

Service Recovery Policies Spotify’s recovery standards have 3 segments. First, if users are unsure of their problem or are encountering a trivial problem, they can look through the highly extensive FAQ sheet on the spotify website. This is where users can find answers for all of their questions. It is easy for users to navigate through the FAQ site as the questions have been grouped according to the type of problem. For example, there is a tab for problems relating to logging into spotify. This tab specifically deals with only this problem. This is quite a simple way for users to understand the issue and solve their problems.

However, if a user still has problems with service they can contact the customer support personnel via email who promptly respond to all questions and complains regarding the service.

Just like every internet service, Spotify sometimes needs system maintenance. During the maintenance period, the server could be disrupted causing users inconvenience and problems. To address these issues, spotify uses social media to announce problems with service as well as the status of the solution. They actively engage their users. For instance, they provide real time information to their users via twitter status updates that allow users to identify whether the issue is with their equipment or with service provider.

Spotify Service Standards Music streaming has recently entered the digital market and there are no fixed standards that these services should follow. However, we feel that there are some common grounds which are used in comparing these service standards.

Price The pricing of the service should be affordable and priced reasonably with respect to the purchased music such as the Google Play & iTunes Stores.

Accessibility This service should be accessible on multiple devices, for example desktop and mobiles. Thus, allowing this service to be convenient to use. The service should also be compatible with the different operating systems such as iOS, Android, Mac and PC.

Catalogue of music The number of tracks and the database is essential in this service industry. Streaming services should have a decent variety of music from various genres. The

�9

song database should be constantly updated with new releases and should also have a section for old classics.

Local Artist Services should understand the likes of the users. Music streaming services should have songs from local artists to cater to the needs of the individual markets.

Connectivity to server It is very important for a streaming site to have a good connectivity with various servers. It should work well with broadband and 3G servers.

!

�10

Analysis of Findings From our findings, we have identified several interesting and key points that seek to explain the needs of people who are listening to music streaming services. With our methodologies in conducting the survey, only 52 responses were validated according to the scope of our research and were considered in our analysis. We have categorized our analysis in two broad categories:

A. Service Gaps

B. Hard and Soft service customer defined standards for music streaming services.

A. Service Gaps We sought to identify the different service gaps that users were currently dissatisfied with in Spotify.

Listening Gap The results from our survey have shown that a large proportion of the respondents (average of 51.4%, with mean of choice options = 3.34 – Figure 6) were largely neutral and indifferent on being satisfied with the listening channels that Spotify offers. This highlights the fact that while Spotify has existent levels of listening channels to cater to its users, many do not show a particular interest in using channels. Streamers were either ignorant of such existing channels provided or show no significant concern to be part of it.

Figure 6: Survey responses depicting respondent’s satisfaction towards Spotify’s listening channels.

Hence, to maintain its competitive advantage and edge in such a competitive industry, Spotify needs to continually garner feedback from its community to cater

�11

to the changing needs. We can therefore deduce that there is a strong need to emphasize its dedication as a music service that values feedback, either through making its current feedback channels more evident to current users or creating additional channels to solicit feedback.

Service Design Gap With a fifth of our respondents indicating their dissatisfaction in Spotify’s service design, we need to re-look at some service design attributes that would create a seamless and pleasant user experience. As our findings have listed the levels of satisfaction among users towards Spotify’s service design, it is critical to improve the platform to make it more seamless and easier for users to transfer songs to their own personal playlist. A fully integrated platform that allows one to search and share songs with ease would be the basic essentials of any audiophile that streams music.

In addition, Spotify should also seek to incorporate more user flexibility in its current platform, creating a more personalized music experience for users. Flexibility for example, includes the ability to adjust audio equalizer (EQ) (treble, mids, bass levels) of the song. A successful example of this would be the iTunes player, where the user can choose between pre-loaded presets of audio EQ or manually adjust them. This is a crucial factor for any serious music listeners, as some would prefer having more bass to their songs, providing the deeper feel while some might go high on the trebles to bring out the clarity and sharpness of the song.

Service Delivery Gap The top two attributes that users found most dissatisfying – the workability of application buttons and ease of syncing playlists between digital devices clearly suggests that Spotify could improve on these tangibles to deliver its services effectively and close its delivery gap. Any modern application on PC/Mac that does not function fails to fulfill its basic existence on the purpose it was created for. Having faulty in-app buttons will only cause to ruin the listening experience of any media player and would result in users switching to a competitor.

With Apple’s innovation and application of the easy syncing of songs between iTunes and their iPods, it has influenced many music lovers and created a need in them for seamless song syncing across music devices. Hence, Spotify should not lag behind but must cater effectively to users in this aspect, to close its service delivery gap.

!

�12

Communication Gap One key point that should be highlighted in Spotify’s communication channel is that nearly 12% of the respondents were highly dissatisfied with the lack of explanation in the manner of how music artists are paid by Spotify. While this might not be a concern in terms of getting users to subscribe to its premium service, Spotify should nonetheless address such issues, to inculcate a sense of assurance (a quality indicator) to its listening community. Users want clear and transparent explanations on how artists are getting their royalties from Spotify, so that they can better understand how the service works.

In addition, about 10% of the respondents mentioned that they were dissatisfied in the aspect where the communication of the difference between Spotify’s free and premium services was not clear. Consisting of the main bulk of Spotify’s revenues, the ultimate existence of the premium service seeks to convert as many users from its free service to paying for its premium service. This is a crucial communication aspect that Spotify can seek to improve. Should Spotify not communicate the differences clearly, it would lead to many users sticking with its free service. This would then pose as a potential loss of revenue from users who are unable to differentiate the benefits and therefore would not switch to using Spotify’s premium services.

!B. Hard and soft customer defined standards ! From our findings, we were able to exact hard and soft customer-defined standards that they would minimally expect to pay for a music streaming service.

Song Quality When asked to select the minimum standards of song quality required for music streaming that they would pay for, a third of the music streamers were unaware of such industry standards, another third expressed that they desired the normal bit rate quality while the remaining third desired the highest bit rate quality. It can be deducted that music streamers were not at all interested in having the lowest bit rate quality of music (e.g. 96kbps).

! A striking 96% of our respondents however, expressed decent levels of satisfaction with Spotify’s music quality. Spotify currently offers three music qualities for users to choose from (see Table 1). It firstly caters to users who have low bandwidths, as such streaming lower bitrate qualities would suffice for them. It also caters to users who have decent bandwidths, offering them the choice to switch

�13

between bitrates depending on their connection speed.

Table 1: Three standards in music quality measured by kilobits per second (KBPS) ! Spotify should remove its low bitrate quality streaming services, as there is no significant demand or interest and should instead focus on providing higher quality streams to music streamers.

Compatibility 91% of our respondents indicated that a streaming music service must at least operate on the PC/Mac operating system, with 78% also indicating that it must at least work on a smartphone. This clearly shows that users of music streaming services have a strong need in a media platform that is capable of streaming music across their personal devices (laptop, tablet and smart phone). Once again, we see an increasing trend of music streamers wanting the flexibility in listening to music streams wherever they are.

Currently, the free service of Spotify works only across the PC/Mac operating systems while the premium service of Spotify gives you the added advantage of streaming music across phones and tablets, increasing mobility and flexibility. Hence, we can see that Spotify has successfully managed to integrate its player across multiple platforms and has met expectations of the music streamers.

Social & Payment Connectivity With an increasing trend of people turning to social media platforms for instant sharing of photos, songs and videos, 64% of our respondents preferred using Facebook as a medium to share their current songs and playlists with their friends. This can be contrasted with other social platforms, with 16% preferring connecting via Twitter and only 14% connecting via Google Plus. Spotify is built on social connectivity, relying on users to share new song and album releases. Currently it incorporates Facebook, Twitter and Tumblr sharing in its media platform, surpassing standards that music streamers minimally expect.

As seen in our findings, our respondents were keen on using Paypal to pay for premium services because they were more familiar and comfortable in such a payment method. Spotify offers not only payment through Paypal, but also through credit/debit cards, Facebook, Boku mobile and online ecard payments for users. This increases the flexibility to which users can easily choose their preferred method of payment.

Lowest bitrate quality (96kbps)

Normal mp3 bitrate quality (160kbps)

Highest bitrate quality (320kbps)

�14

Payment Plans According to the responses, 64% of the music streamers clearly indicated that they would very much prefer a flat rate per month method of premium subscription. A flat rate per month refers to paying a flat fee of $10 for an unlimited choice and play of songs on Spotify’s premium service. However, about a third of the respondents were more inclined towards a selective rate of subscription. An example of this is where users would pay 10 cents for the newest song release, and 1 cent for a normal song catalogue. This caters to streamers who prefer only listening to selected songs and would not pay for the entire catalogue of songs available. Spotify, however only offers the flat rate per month and would thus need to incorporate a more flexible method of subscriptions for music streaming users.

�15

Recommendations In consideration of our findings of local market sentiments and market trends, we suggest two improvements Spotify can make: one to its communication policy to increase consumer satisfaction towards the service, another to its pricing strategy to maximize revenue without compromising its main service promise to deliver “all the music, all the time”.

Better communicating the way Spotify pays artists Spotify’s treatment towards its artists, the sole suppliers of the content behind its service, has been at the center of controversy in the world of digital music. Managing royalties paid to artists is a chronic and non-unique challenge for music streaming companies. Having competitive advantage with superior technology is secondary to having ownership of music rights, a fact that compels such companies to put the needs of its artists at the top priority. Furthermore, artists have a sizable influence over their target consumers, as evident of PR stunts such as Pink Floyd’s dispute with Pandora (USA Today, 2013) and Thom Yorke’s (Radiohead) with Spotify (Business Insider, 2013). Artists easily leverage on their celebrity status to impose bad impressions of music streaming on their less discerning fans, resulting in the popular negative associations consumers make to music streaming brands, such as ‘exploiting royalties’ and ‘ripping off artists’.

We recommend a communication strategy that is reminiscent of McDonald’s Open Doors policy to manage poor public opinion of its food. Currently, Spotify maintains a section of Artists Services on their support page, in which they provide vague numbers on overall artist compensations and payment policies such as “$500m paid to artists in 2012” and “2% of our gross royalties for an artist whose music represents approximately 2% of what our users stream”.

Spotify needs to aim for greater transparency. By regularly publishing statistics of royalties paid out to artists in a precise and honest manner, the service can then effectively highlight the benefits of this relationship Spotify has with artists. On top of that, these numbers need to reach consumers in an effective manner. Interesting messages such as “Top 10 Streamed Artists” and “Breakthrough Artist of the Month” accompanying royalty numbers are attention-grabbing and of interest to customers. Aside from paying off popular artists from streaming, the service

�16

should ideally include growing artists to highlight the versatility of the service. From releasing the total sum paid for streaming Adele’s Grammy-winning 21 album to publishing the stream counts for new artists like The Lumineers promote their debut self-titled album, users are continually reminded that their decision to purchase the service is a legal alternative that has a tangible benefits to the artists they enjoy.

!A Better Pricing Strategy for Music Lovers Our study revealed that there are customers who are also interested in paying a selective rate if it could mean gaining access to the newest songs on the same day of their release. Here we see an opportunity to monetize these needs.

An economical solution we considered was the introduction of structured price plans. This will be done by categorizing the service catalogue according to genres, then progressively charging users based on the number of catalogues they want access to the service. This potentially limits the user’s access to the full catalogue, in turn diminishing Spotify’s value as a service for people to discover music. Segregating the catalogue is not only a tedious endeavor but also a very risky one, in the danger of alienating its loyal following of customers.

Table 2: Proposed two monthly add-ons to Spotify’s Free & Premium options.

!

Free Premium Fresh Access Live

Price/ month

S$0 S$9.90 + $3 + $4

Access to catalogue

Unlimited, with ads Unlimited

Newest hits one week in

advance

Videos, commentary,

demo recordings

�17

Our team suggests something feasible: paid monthly add-ons that build on the consumer’s Spotify experience. Let’s keep the flat $10 rate so users get access to a rich back catalogue of classics, greatest hits, past songs.

Lets introduce small paid options for the user to choose from, such as Fresh Access, an additional $3 a month add-on catered to the music lovers, which gives them access the newest same-day releases. Such new releases would be available to other users 1-2 weeks after release.

Or to appeal to hardcore fans who follow artists beyond the content they release, another add-in option, Live, could give users access music videos, commentary by artists on their albums and process, studio demo recordings. The small additional commitment from each consumer gives them an added benefit to their experience. At the same time, with more monetary incentive for more content, the service is better able to persuade artists to release new content onto streaming.

We believe introducing add-ons to Spotify’s pricing model is the most effective way to distinguish between both the Audiophiles and Explorers for better revenue, without compromising the company’s service promise to deliver a world of music to the consumers.

!

�18

Fresh Access users can gain a first listen to albums such as Lady GaGa’s 2013 ARTPOP album. The album would then be made available to other users 3-4 weeks later.

Growth Strategies With knowledge from current trends and our findings, we’ve identified two ways for Spotify to take advantage of its superior streaming technology to two new product categories: audiobooks and digital education.

Audiobooks-on-demand In the US, a 2011 study by Audio Publishers’ Association conducted, 42% of recent audiobook buyers surveyed report are interested in streaming audio, from vendors such as Spotify and Pandora.

We predict this is the most likely extension that Spotify will implement in its service, for two reasons:

1. Potential new customers. The results of the sales survey showed unit sales of audiobooks in 2011 were up 13% since 2010. The estimated size of the audiobook industry in 2011 was $1.2 billion and is set to grow. This requires the streaming technology that Spotify has, but the company has been only focused on music streaming. We believe a gradual roll out of titles onto the service, coupled with a possible add-on for those who want audiobooks, could greatly boost earnings for the service.

2. We estimate very minimal costs to incorporate audiobooks into their infrastructure, since the most significant additional cost to Spotify would be extra servers to accommodate the audiobooks.

Education-on-demand In the growing digital education market, we have publishing giants like Pearson and McGraw-Hill relying more on digital publishing for their education needs. We think Spotify’s Applications feature is a suitable tool to add value to digital education publishing, by offering audio course streaming on-demand.

!!!

�19

Applications is a feature on Spotify, which target very specific needs of consumers, such as a platform for fans to better interacting with specific artists. It even allows customers to explore the collections of renowned lists, such as the Rolling Stone 100 greatest guitarists of all time. Rolling Stone magazine cites the Spotify app as a “perfect complement” to their print material, helping readers to interact with their material the way music journalism should have in the first place.

We predict that Spotify will engage with education publishers to offer separate education streaming services that will potentially disrupt or influence leading names in digital education services such as iTunes U and Khan Academy.

!

�20

In Closing We’ve looked closely at music streaming as a service industry with high potential growth in the next five years, took a leading example in this market and analyzed its service constructs. Spotify’s unique service design that leverages on minimal physical evidence and responsive customer service and interaction,

We’ve studied local users of streaming services and found out the standards that they expect from a service, such as streaming quality, payment connectivity and user-friendliness of its UI, We’ve found out that the most pertinent gaps in service that customers find in Spotify are its deficiency in communicating how the service pays artists, because customers view the service as an important legal alternative to music piracy,

We identified two segments of the market at its stages of infancy, the music audiophiles and music explorers, and we believe the segments will change over the years as its players grow and innovate. In response to these two segments, we’ve recommended adopting add-ons as a pricing strategy to maximize revenue from the service without compromising values.

Looking at plausible growth opportunities of the service, we’ve talked about audiobooks and education-on demand as possible avenues of growth for the company.

Spotify’s service is built upon a solid foundation of superior streaming technology that is matched by few, establishing itself as one of the leading pioneers of music streaming today, albeit a few gaps in service which the company can easily address. Above all, the company’s biggest challenge is still striking a balance between customer and artist satisfaction; without either, the company’s business model will fail. This is a company with essentially no tangible product nor physical evidence, yet has managed to bring to customers a new definition of discovering music. As long as the company continues to expand its catalogue of music, appealing to every taste and genre, the service will be a formidable disruption to the music industry and a major influence on the way we consume music.

�21

References Spotify AB, Spotify, Artist Services – What Is Spotify?, ed. Spotify AB, Publication 2008, Accessed 11 November 2013. https://www.spotify.com/sg-en/about-us/artists/what-is-spotify/

Bertoni, Steven, Forbes, Spotify’s Daniel Ek: The Most Important Man In Music, ed. Steven Bertoni, Publication 4 January 2012, Accessed 11 November 2013. http://www.forbes.com/sites/stevenbertoni/2012/01/04/spotifys-daniel-ek-the-most-important-man-in-music/

Spotify AB, Spotify, Information, ed. Spotify AB, Publication 2008, Accessed 11 November 2013. http://press.spotify.com/sg-en/information/

Spotify AB, Spotify, Artist Services – Get Paid on Spotify, ed. Spotify AB, Publication 2008, Accessed 11 November 2013. https://www.spotify.com/sg-en/about-us/artists/get-paid-from-spotify/

Townsend, Mark, The Guardian, Musicians’ Union demands new pay deal from Spotify, ed. Mark Townsend, Publication 20 July 2013, Accessed 11 November 2013.

Sisario, Ben, The New York Times, As Music Streaming Grows, Royalties Slow to a Trickle, ed. Ben Sisario, Publication 28 January 2013, Accessed 11 November 2013.

Sisario, Ben, The New York Times, As Downloads Dip, Music Executives Cast a Wary Eye on Streaming Services, ed. Ben Sisario, Publication 20 October 2013, Accessed 11 November 2013.

Tschmuck, Peter, Music Business Research , Is streaming the next big thing? – an international market analysis, Publication 4 June 2013, Accessed 11 November 2013.

!

�22

Appendices Appendix A: Consumer Survey Question Set 1) Choose which music listener profile suits you the best at the present moment:

- I use only Music streaming services (Soundhound, iTunes Radio, Spotify, Beatport etc...) for all my music needs

- I only purchase/download digital music (iTunes, Windows Player, Amazon Music, Google play etc..) for all my music needs

- I use BOTH music streaming services and purchase digital music (e.g. I currently use Soundcloud and purchase iTunes music)

- I do not listen to music in digital formats at all

!2) Could you specify if you've paid for any music streaming services at any point of time, or are still paying for one?

- Yes, and I am still paying for a streaming service at the moment

- Yes, I used to pay for it, but no longer

- No, I’ve only used streaming services which are free

!3) Check the music streaming service that you recognize.

- Sound Cloud

- iTunes radio

- Beatport

- Spotify

- 8tracks

!4) Check the music service you’ve used or are currently using.

- Sound Cloud

�23

- iTunes radio

- Beatport

- Spotify

- 8tracks

!5) Indicate your usage intensity as a user of Music Streaming services you've indicated of using.

Frequency:

Light: 1-2 times a fortnight

Medium: 3-4 times a week

Heavy: 5-6 times a week

Habitual: Everyday

!6) Please indicate the devices in which you use Music Streaming Services.

To clarify,

Local app: Accessing the service using an application installed on your computer.

Web app: Accessing the service using a web browser such as Chrome or Safari.

- PC/Mac (Local App)

- PC/Mac (Web App)

- Smartphone

- Tablet

!7) Please indicate the device(s) in which you consume your digital music.

- PC/Mac

- Smartphone

�24

- Tablet

- Other

!8) Listening Channels (rate 1-5, 1 – Very Dissatisfied, 5 – Very Satisfied)

- Avenues for providing feedback to Spotify

- Avenues for Spotify community support (discussion forums, customer support)

- Availability to send bug and crash reports when apps do not work

- Avenues to suggest artists/songs to make available on service

!9) Service Design Channels (rate 1-5, 1 – Very Dissatisfied, 5 – Very Satisfied)

- Ease of navigating with Spotify

- Ease of searching songs

- Ease of following other users’ playlist

- Ease of transferring songs to personal playlist/library

- Aesthetically pleasant

- Functions (Discover, Top Hits, Radio)

- Flexibility (e.g. adjusting audio EQ)

- Interactivity with Facebook Friends (sharing playlists, sending songs)

!10) Service Delivery Channels (rate 1-5, 1 – Very Dissatisfied, 5 – Very Satisfied)

- Compatibility with operating system

- Streaming connectivity

- Music Quality

- Workability of application buttons and tabs

�25

- Ease of syncing playlists between digital devices

!11) Communication Channels (rate 1-5, 1 – Very Dissatisfied, 5 – Very Satisfied)

- Advertises exactly what the service does

- Clearly communicates the difference between its free and paid services

- Timeliness of notifications about new updates of the service

- Explains how artists are paid by Spotify

!12) Visualize yourself using Spotify as a complement to your purchased digital music. 

 

Please rank the importance of each service attribute to your decision to use Spotify as a complement to your digital music. You can drag and drop the following attributes.

1 being the attribute most important to you,

6 being the least important attribute.

- Price

- Accessibility

- Catalogue of Music

- Has local artists

- Connectivity to music server

- Offline Listening

!13) Visualize yourself considering using Spotify to satisfy all your listening needs.

 

�26

Please rank the importance of each service attribute to your decision to solely rely on Spotify for your listening needs. You can drag and drop the following attributes.

1 being the attribute most important to you,

6 being the least important attribute.

- Price

- Accessibility

- Catalogue of Music

- Has local artists

- Connectivity to music server

- Offline Listening

!14) Are you familiar with what Music Streaming services can offer you?

- Yes

- No

!15) Are you considering using Music Streaming services in the future?

- Yes

- No

!16) Visualize yourself considering to TRY using music streaming service for your listening needs.

Please rank the importance of each service attribute to your decision to TRY music streaming services.

1 being the attribute most important to you,

6 being the least important attribute.

�27

 

- Price

- Accessibility

- Catalogue of Music

- Has local artists

- Connectivity to music server

- Offline Listening

!17) Visualize yourself considering to switch entirely to using music streaming service for your listening needs, without relying on for purchasing digital music.

Please rank the importance of each service attribute to your decision to switch entirely to music streaming services.

1 being the attribute most important to you,

6 being the least important attribute.

- Price

- Accessibility

- Catalogue of Music

- Has local artists

- Connectivity to music server

- Offline Listening

!18) Could you share a simple reason why Music Streaming service does not appeal to you?

!19) Age

�28

20) Monthly Income

21) Employment

!22) Minimum standards that you would require of a music streaming service that you would pay for:

Song quality:

- at least 96 kbps, 160kbps, 320 kbps, not aware

Social & Payment connectivity

- Facebook, Google+, Paypal, Twitter, Not sure

Payment Plan:

- Flat Rate, Progressive Rate, Selective Rate

Service must work at least on these devices:

- Personal Computer

- Smartphone

- Tablet

- Not sure

!

�29