I NEED A HELP FOR QUESTION 2 AND 3 PLEASE.

Spotify and SoundCloud Numerous online music platforms exist today, with Apple big companies and established firms. Despite the global Music, Google Play Music, Pandora, Spotify, Sound- fascination with start-ups, only 8 percent of all firms in Cloud, and YouTube as perhaps the most common ways the U.S. meet that definition today, a remarkable drop people listen to music online around the world. What's from a few decades ago. popular, of course, can change rapidly. Numerous other In Sweden, the trend has been reversed. The pace of music platforms exist or have existed (e.g., 8tracks, new-business creation start-ups has been accelerating. AccuRadio, Dash Radio, Deezer, Grooveshark, iHeart- Countries like Brazil, India, Romania, Germany, and Sin- Radio, Incus Tunes, Jango, last.fm, Mixloud, Musix Hub, gapore have also seen an increasing trend of start-ups in MySpace, RDIO, Slacker Radio, TuneIn Radio, The Sixty recent years. These start-ups are critical to a country's One, Xbox Music), and some of these will overtake the economy. They create jobs, spur innovation, and foster top platforms of today, some will be gone soon, and some the entrepreneurial spirit that drives economic growth. already have very few users remaining. In this fierce com- For example, in the United States, small- and medium- petitive technology environment, Swedish entrepreneurs sized enterprises account for 98 percent of the country's have made an incredible mark on the music industry. exporters, and start-ups fall into this SME category (often It all begins, really, with the countless start-ups that as so-called "born globals-companies that start selling Sweden has produced. The focus of this case is Spotify internationally early on after inception). Spotify and and SoundCloud. However, to better understand the cre- SoundCloud fit all of these categories as start-ups-they ation of companies and brands such as these, it's impor- were initially small, went international early on, and tant to know how a tiny country like Sweden with a helped drive exporting numbers. population of 10 million people and pretty high govern- Spotify is a Swedish entertainment company founded ment spending can be so innovative and entrepreneurial. in 2008 by Daniel Ek and Martin Lorentzon that special- Given its size, it should come as no surprise that compa- izes in music, podcast, and video streaming. Spotify Tech- nies from Sweden rely on exports for much of their sales. nology SA is headquartered in Stockholm and listed on And the start-ups have become a cultural phenomenon in the New York Stock Exchange as SPOT. The company Sweden that have helped the economy grow in unimagi- has more than 3,000 employees, 200 million users, and nable ways from just a couple of decades ago. revenue of about $5 billion. Spotify is available in most of Stockholm, the capital city of Sweden, produces the Europe, the Americas, Oceania, and parts of Asia. Spo- second-highest number of billion-dollar tech companies tify gives users access to more than 30 million songs and per capita, after Silicon Valley. The change happened in has some 140 million active monthly users, with more the 1990s when Sweden needed a boost to its economy. than 70 million paying subscribers. The country used to be heavily regulated and public mo- SoundCloud was founded in 2007 in Stockholm, Sweden, nopolies dominated the market, but regulations have been by Alexander Ljung and Eric Wahlforss, who almost eased since that time. Interestingly, while Sweden was immediately developed a headquarters for the company making it harder for monopolies to dominate the market, in Berlin, Germany. In effect, Alexander Ljung and Eric the regulatory landscape in the U.S. was changed to favor Wahlforss used the great infrastructure for start-ups in Exporting, Importing, and Countertrade Chapter 16 495 June 1, 2016; Alana Semuels, "Why Does Sweden Have So Many Start- Ups?" The Atlantic, September 28, 2018; "Spotify Makes Its Stock Market Debut," The Economist, April 4, 2018; "Having Rescued Recorded Music, Spotify May Upend the Industry Again," The Economist, January 11, 2018; and "SoundCloud Streaming Hones In On Creator Uploaded Content: CEO," Business Week, April 23, 2018. both Sweden and Germany to launch SoundCloud and build it into what it has now become-a company with 300 employees, 40 million registered users, and 175 mil- lion monthly listeners. With a different focus than Spotify, SoundCloud positioned itself as an online audio distribu- tion platform that enables users to upload, record, pro- mote, and share their originally created sounds. Both Spotify and SoundCloud are service businesses that have entered into the global marketplace with music platforms that customers find valuable. Service exports are an important and increasing trend in global trade. Take, for example, the developed countries in the world, most of whose economies-around 75 percent-are service- based. If these economies, like Sweden and Germany, did not find an opportunity to export their services, they would likely fall behind in the trade balance imports ver- sus exports). Interestingly, the U.S. has a relatively large trade surplus in services, but a massive trade deficit in manufactured goods. If the U.S. could reduce the deficit in products to have a neutral import-export ratio, the country's service economy would automatically create a trade surplus-which the country has not seen for some 50 years. Given that a service export is really any service provided by a resident in one country to people or organi- zations in another country, we know many countries can be successful, or at least have the opportunity to export more services, such as what Sweden and Germany are doing with Spotify and SoundCloud. Case Discussion Questions 1. Numerous online music platforms exist today, with Apple Music, Google Play Music, Pandora, Spotify, SoundCloud, and YouTube as perhaps the most common ways people listen to music online around the world. Which one(s) do you use and why? Which one(s) do you think will no longer be in operation in 10 years and why? 2. Based on what you can read in this case and what you are able to glean from researching Sweden, why do you think Stockholm, the capi- tal city of Sweden, produces the second-highest number of billion-dollar tech companies per capita, after Silicon Valley? 3. What are the strengths and weaknesses of Spotify and SoundCloud, respectively? Do you think their business models will last, or will other innovative ideas overtake the market power that Spotify and SoundCloud have in the interna- tional marketplace