Spotify Technology in $2022$: Will Its Strategy Lead to Profitability?

The case is intended to introduce students to a global company$$s evolving strategy with a freemium and subscription business model. This case works especially well after covering Chapters $16.$ Students will be able to utilize concepts from Chapters $1,2,$ and $5$ in evaluating the company$$s business model and strategy, select tools from Chapter $3$ in assessing industry attractiveness and competitive rivalry in the industry, Chapter $4$ company situation analysis tools, and Chapter $6$s discussion of strategies for strengthening a company$$s competitive position.

Spotify Technology in $2022$ case should generate student interest since the company will be well$-$known among students with many being subscribers to Spotify or a similar music streaming service. The case should provoke a well$-$thought$-$out discussion of the appeal and future of streaming services, namely in the music industry.

How would you describe Spotify$$s business model considering its subscription tiers? What makes it different?

Select the best response$($s$)$ from the options provided.

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Spotify$$s business model includes its premium service and unlimited access to its streaming service.Spotify$$s business model includes its premium service and unlimited access to its streaming service.

Spotify$$s freemium business model is a revenue$-$generating model based on the company$$s user baseSpotify$$s freemium business model is a revenue$-$generating model based on the company$$s user base

Spotify employs a platform business model. A platform business model facilitates interactions across a large number of consumers.Spotify employs a platform business model. A platform business model facilitates interactions across a large number of consumers.

Spotify takes advantage of network effects. Network effects occur when a product or a service$$s perceived value increases as more consumers use the product or service.Spotify takes advantage of network effects. Network effects occur when a product or a service$$s perceived value increases as more consumers use the product or service.

Spotify's business model includes allowing limited access to songs and podcasts based on region.Spotify's business model includes allowing limited access to songs and podcasts based on region.

Spotify$$s revenue$-$generating strategy is based on its three tiers, the advertisement$-$supported free$-$tier, the premium tier, and the podcast tier.Spotify$$s revenue$-$generating strategy is based on its three tiers, the advertisement$-$supported free$-$tier, the premium tier, and the podcast tier.

The company$$s business model relies on the ad$-$supported tier to generate revenue and cover costs.The company$$s business model relies on the ad$-$supported tier to generate revenue and cover costs.

The three business tiers and its broad differentiation strategy give Spotify a competitive advantage by appealing to a broad spectrum of consumers.The three business tiers and its broad differentiation strategy give Spotify a competitive advantage by appealing to a broad spectrum of consumers.