• Pestle analysis of Spotify 2018

Introduction 

The music streaming industry is very profitable but also very competitive with many players majorly apple music, Spotify, Amazon and Pandora. Spotify is the world’s leading digital music streaming service that gives people access to millions of songs, videos and podcasts from artists all over the world (Willings 2018). Spotify has an average of 71million global monthly subscribers with close competitor Apple music having 40million subscribers (Richter 2018). Spotify also has a global market share of 47.8% with major competitors pandora and Apple Music having 21.6% and 10.5% market shares respectively based on their streams (Wagner 2018).

1.1 Bargaining Power of the buyer

According to Grant (2016), the ability of buyers to drive down the prices they pay is dependent on two factors: their price sensitivity and their bargaining power relative to the firms within the industry. Price sensitivity is normally determined by factors like product differentiation, competition, and significance of the product to the consumer. However, consumer bargaining power is determined by factors like cost and ease of switching to purchase products from Spotify competitors like Amazon music, Google pay or Tidal, as well as buyer information regarding prices music streaming services in the market. Considering the above factors, we can conclude that a Spotify subscriber has high bargaining power because of the availability of many streaming services like Apple Music, Tidal, Pandora, which offer similar high-quality material (music, videos, podcasts) in the same price range making switching costs between different streaming services very minimal. For example, Apple Music and Spotify both have monthly subscription fees of $9.99 or $14.99 for family membership (Harper 2018) meaning there’s zero switching costs hence giving the customer a wide variety of streaming services to choose from with no additional costs.

1.2 Competi