💬 Context

Just to give you a bit of background, Spotify is a leading music streaming platform that operates globally, offering a vast library of songs, podcasts, and audio content to its users.

The business model of Spotify revolves around two primary income sources. The first is the freemium model, where users can access the platform for free with ads, and the second is the premium subscription model, where users pay a monthly fee to enjoy an ad-free and enhanced listening experience.

Spotify provides a user-friendly app and website that allows users to discover, stream, and curate personalised playlists tailored to their music preferences. The core user problem that Spotify solves is providing a convenient and accessible way for individuals to access a wide range of music and audio content anytime and anywhere. With its extensive catalogue and recommendation algorithms, Spotify offers users the ability to explore new music, create playlists, and enjoy a seamless streaming experience.

The success of Spotify can be attributed to its ability to address the evolving needs and behaviours of music enthusiasts in the digital age. As music consumption shifted from physical media to digital formats, Spotify emerged as a game-changer by offering a legal and convenient alternative to piracy. By providing a legal and comprehensive music streaming service, Spotify attracted a large user base and disrupted the traditional music industry.

In addition to its vast music library, Spotify recognised the growing popularity of podcasts and ventured into this space. By incorporating podcasts into its platform, Spotify expanded its content offerings and attracted a broader audience. This strategic move allowed Spotify to differentiate itself from competitors and become a one-stop destination for both music and podcasts.

👀 Problem

What problem (or opportunity) are we trying to solve and Why is it important to our business?

Responses of Spotify users

After conducting user surveys and interviews amongst 70 users, we have identified a significant problem or opportunity for Spotify: the majority of users do not find the premium version worth it, as they perceive limited value in paying for the service and instead prefer other music streaming platforms like Wink, Apple Music, and Amazon Music. Moreover, another important finding is that many users find that the free version of Spotify already meets their needs. This further emphasises the challenge for Spotify to convince users of the added value and benefits of upgrading to the premium version.

This problem is crucial to address because it directly impacts Spotify's business and revenue model. The premium version of Spotify is a key source of income, providing additional features and an ad-free experience to subscribers. If users do not see the value in upgrading to the premium version, it can result in several negative consequences for the company:

• Decreased Revenue: Users opting for other music streaming services instead of upgrading to Spotify Premium will result in lost subscription fees and potential ad revenue from free users. This can directly impact the company's financial performance and growth.
• Market Share Loss: With users choosing competitors over Spotify, there is a risk of losing market share to platforms like Wink, Apple Music, and Amazon Music. This can reduce Spotify's overall user base and potentially hinder its ability to attract new users.
• Reduced Customer Loyalty: When users do not perceive value in the premium version, they may be more likely to churn or switch to other services. This can lead to a decline in customer loyalty and weaken Spotify's long-term relationships with its user base.

To remain competitive and sustain its business growth, it is crucial for Spotify to address this problem. By understanding the reasons behind users' perception of limited value and actively working on improving the premium offering, Spotify can enhance its appeal, retain existing users, attract new subscribers, and ultimately increase revenue and market share.