It also incorporates a network effects business model alongside a network orchestrator business model. The company also identifies promising high-growth emerging markets to gain a foothold in, such as Brazil, India, and Africa. It focuses on improving its brand image through social media marketing (Spotify has over 22 million likes on Facebook), exclusive deals with major artists, and building on its solid user base. Spotify’s market development and penetration strategies include focusing on its key markets. The company also records a significant portion of its revenues from other services it provides, such as Artist Services, Content Services, Licensing, and Merchandise & Fan Supply. Spotify’s primary revenue sources include Subscription and Advertising. The company’s success can be attributed to its “freemium” business model, which entices the users to upgrade from free to premium users by offering certain benefits such as offline playlists, enhanced sound quality (320 kbps bitrate), and no ads. Its gross margin is expected to increase going forward mainly due to efficient operating leverage as the company has been experiencing over the past few years. In the second quarter of 2021, Spotify recorded revenues amounting to 2,331 million Euros with a gross margin of 28.4% Y/Y. In addition to Europe, it’s also present in North and South America, Asia Pacific, and recently Africa. The company has a solid presence in European countries like Sweden, Germany, and the UK. It has offices in 16 countries across the world with about 6554 employees. Spotify has a huge user base of 365 million monthly active users, of which 161 million are premium subscribers. The company was founded in 2006 by Daniel Ek and Martin Lorentzon and currently has its headquarters in Stockholm, Sweden. Spotify is a digital music streaming company and a media service provider that allows users to listen to music online or create playlists.
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