Spotify, Rhapsody, Pandora: Business Model Analysis
Spotify, Pandora, and Rhapsody: Business Model Analysis
The Music Industry’s everlasting challenges have most recently undertaken targeted the digital consumption of music. As technology increases accessibility with media, specifically music, companies such as Spotify, Rhapsody, and Pandora have all taken a leap toward the online-streaming subscription route. Unfortunately, due to the lack of support from Artist’s and their management in the past, piracy of digital music, and matching royalty rates with their limited revenue streams, these companies face the difficulty of becoming the go-to access for music consumption.
When digital music first came out, listeners had the option of discarding of their tangible forms of music. Like any other newly introduced technology, listeners had a hard time making the switch. The tough transition from CD’s, Tapes, etc. was mostly a result of the limited amount of devices that were available to consume digital music. In the last decade or so, music in the digital form has emerged immensely into many devices including computers, smart phones, TV’s, cars, tablets, video game consoles, and even a refrigerator. Rhapsody was a company that saw a valuable concept in the transformation to digital music when it was first introduced. Rhapsody was the first company to see success in the online subscription-based music service. It began it’s battle of pirated music before Spotify and Pandora, but continues to lag behind in terms of revenue and users. Spotify and Pandora use a similar business model by collecting their revenue from advertisements and subscriptions, but continue to outlast Rhapsody. In an article in the Tech section of CNN.com, contributor Richard Nieva said, “Rhapsody may simply have been ahead of its time. It advocated storing music in the cloud long before the idea, let alone the term, was in vogue.” Though the path to becoming the dominant source of consumption is clouded by other free services and illegal downloads,
The Music Industry’s everlasting challenges have most recently undertaken targeted the digital consumption of music. As technology increases accessibility with media, specifically music, companies such as Spotify, Rhapsody, and Pandora have all taken a leap toward the online-streaming subscription route. Unfortunately, due to the lack of support from Artist’s and their management in the past, piracy of digital music, and matching royalty rates with their limited revenue streams, these companies face the difficulty of becoming the go-to access for music consumption.
When digital music first came out, listeners had the option of discarding of their tangible forms of music. Like any other newly introduced technology, listeners had a hard time making the switch. The tough transition from CD’s, Tapes, etc. was mostly a result of the limited amount of devices that were available to consume digital music. In the last decade or so, music in the digital form has emerged immensely into many devices including computers, smart phones, TV’s, cars, tablets, video game consoles, and even a refrigerator. Rhapsody was a company that saw a valuable concept in the transformation to digital music when it was first introduced. Rhapsody was the first company to see success in the online subscription-based music service. It began it’s battle of pirated music before Spotify and Pandora, but continues to lag behind in terms of revenue and users. Spotify and Pandora use a similar business model by collecting their revenue from advertisements and subscriptions, but continue to outlast Rhapsody. In an article in the Tech section of CNN.com, contributor Richard Nieva said, “Rhapsody may simply have been ahead of its time. It advocated storing music in the cloud long before the idea, let alone the term, was in vogue.” Though the path to becoming the dominant source of consumption is clouded by other free services and illegal downloads,
Cited: Business: Free but legal; spotify v illegal downloads. (2009, Aug 01). The Economist, 392, 57-n/a. Retrieved from http://ezproxy.loyno.edu/login?url=http://search.proquest.com/docview/223971392?accountid=12168 http://businessmodelinstitute.com/pandoras-business-model-experiment/ http://articles.businessinsider.com/2011-10-12/research/30269526_1_spotify-revenues-cost Barraclough, E. (2010). Spotify reveals challenges facing streaming companies. Managing Intellectual Property, , 30-31. Retrieved from http://ezproxy.loyno.edu/login?url=http://search.proquest.com/docview/233240168?accountid=12168 Scaggs, A., & Letzing, J. (2012, Sep 07). Pandora shares plunge on apple fears. Wall Street Journal (Online). Retrieved from http://ezproxy.loyno.edu/login?url=http://search.proquest.com/docview/1038358259?accountid=12168 Smith, E. (2012, Apr 11). Music industry, online services strike deal; proposal would create guidelines for new online services. Wall Street Journal (Online). Retrieved from http://ezproxy.loyno.edu/login?url=http://search.proquest.com/docview/993217876?accountid=12168 Bradshaw, T. (2012, Feb 14). Music industry all ears on digital streaming. Financial Times. Retrieved from http://ezproxy.loyno.edu/login?url=http://search.proquest.com/docview/921355201?accountid=12168 https://www.spotify.com/us/about-us/artists/get-paid-from-spotify/ Hampp, A. (2011). Fridges, fords and phones: How did pandora end up in everyone 's box? Advertising Age, 82(3), 2-2. Retrieved from http://ezproxy.loyno.edu/login?url=http://search.proquest.com/docview/847074059?accountid=12168