Spotify: Face the Music (Update 2018)

Case Solution

Govert Vroom, Isaac Sastre

Spotify reached $3 billion in revenues in 2016, amid a booming musicstreaming market that now made up 51% of the U.S. music industry’s total revenues. Finally the industry had embraced digitization and was now seeing twodigit growth for the first time in decades. However, that growth had an Achilles’ heel. Spotify itself was staring at an operating loss of $350 million, having never been able to post a profit in all its years of existence. Now, the company was starting a round of negotiations with the major labels in order to get a new licensing deal that would help improve the company’s numbers. The case delves into both the history of the digitization of the music industry and the history of Spotify itself, and provides a snapshot of the state of the industry at the time of these negotiations. What alternatives are there to Spotify? Would an agreement with the labels be enough to make it profitable? Do the company and the industry itself have a positive future?

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