Bargaining power of suppliers The bargaining power of suppliers is very low. There are few artists which do not share the thought to let their music stream. If an artist refuses to stream their songs then they will not let it be streamed by any other provider, not only Spotify. However, Spotify always have different agreements with artist, for instance Adele wanted to restrict her fifth album “21”, which sold over 31 million copies worldwide, to only Premium users but Spotify would have needed to change its selling strategies to accommodate her. Eventually the album was not available for any of the users, only later on it became available for streaming devices.
Moreover, AC/DC a rock band, allowed firstly Apple Music so sell their music and then later on the availability for their music to be streamed in services like Spotify, this could affect Spotify service since the music streamed are available sooner in different music services.Figure 6: “Porter’s Five Forces”Threat of Substitute Products or ServicesThe threat of substitute is currently quite high, and many of them offer the same service as Spotify’s, such as Pandora, Soundcloud, iTunes, Deezer, iHeartRadio and many others. But since Spotify was able to establish itself within the music market it is quite difficult to be replaced by other services.
However, it can be argued that the greatest threat for Spotify are not mainly the competitors but the non-premium users, because obviously the goal would be to achieve the highest paid users. Bargaining Power of Buyers The bargain power of buyers is completely controlled by Spotify. They have. Consumers can choose between Premium users and Non-Premium users. If Non-Premium users do not want advertisements, they can easily change to Premium.
Spotify continuously adds new options, for instance the chance to partner with BandPage where users will feel closer with their favourite artists.Threat of New EntrantsAt this stage a threat of new entrants it is quite low, Spotify even though it can be criticised by the amount of revenue and its service, it still has a well-known brand image and it was able to establish itself in a great position within the market. It can be argued that it would be harder for new entrants than services like Spotify and iTunes to keep their position. The image represented below shows Spotify against the competitors present in the music streaming market, with the description of features similar to Spotify’s ones.
