Spotify International Expansion

All consumers tend to Ant the same things, be it a luxury good, or a staple in their everyday lives. As a rather ethnocentric country, the United States of America has a great influence upon the rest of the world. However, the entire North American population United States and Canada) takes up only about 5% of the 7 billion people in the Nor. That means, international markets are comprised of about 95% of the consumers. For businesses solely limiting themselves in America, this is means a huge opportunity for profits in international markets.In this type of ecosystem, innovation is the corner store for change, which directly translates into progress.

In the business world, progress is the sole factor that determines Just how far a many can go, and with international markets playing a much larger role, the potential is limitless. This project is a discussion of the potential that Spottily Ltd. Has in the international market. The purpose is to debate the many opportunities that are currently present, and select from these opportunities the best methods for Spottily expansion into new territories.Many of the opinions provided are based on factual evidence, and are presented in the best interest of Spottily Ltd. And its management team. Michael T.

Stroking is currently a senior at Benedictine University. His projected radiation date is December 2014, with a Bachelor’s in Business – Marketing. After a few years of full-time retail work, Mike realized his passion for marketing when he took up reigns as an assistant manager at The Vitamin Shoppe. Volunteering to help Ninth the marketing process, Michael realized the effects that good marketing can have on a business, and Just how important it was in providing customer flow and traffic.Mike has excellent leadership skills, and has demonstrated them in his training of 5 new store managers for Vitamin Shoppe Industries. He assisted in supervising and ordination a team of 6 delegates, and was crucial in playing his part for achieving Highest-Len-Region Inventory Accuracy in 2011. Mike currently participates in intercollegiate athletics, playing for Benedictine University baseball team.

He is a Dean’s List honoree and recipient of the Presidential Scholarship at Benedictine University. Mike has a passion for music and the arts, and will pursue a career in the music industry Artists and Repertoire department upon graduation.Mike would like to take his love for music and his newly-found expertise in marketing to breathe new life into the slowly-dying music industry. For a complete resume, please refer to Exhibit 1 . Founded in 2006 in Stockholm, Sweden, Spottily has already established itself as the leading provider for music streaming for both the smartened and desktop platforms. For the first few years, free accounts were only provided on an invitation- only basis, while most consumers paid a monthly fee for the subscription to Spottily catalog of music. This gave users access to unlimited music from Spottily catalog of popular music.

This method did not bode well for Spottily, as they reported a loss of about $4. 4 million in 2008. New steps had to be taken when Spottily re-established its headquarters in London, and began to offer free subscriptions to their newly-found consumers in the United Kingdom in early 2009. With the booming of the smartened industry, Spottily released a mobile service, giving consumers access to music wherever they were, as long as they were with their phone. This caused Spottily to place restrictions on the amount songs that could be listened to. From early 2009 to 2010, Spottily began to experience some turbulence.Spottily Nas put under some investigation, when customers’ account information proved to e easily decrypted by hackers.

Due to the new nature of the music service, some antivirus software was recognizing Spottily as a “Trojan Horse”, and disabled the application across millions of computers. Through the struggle, Spottily saw a light at the end of the tunnel as they planned to take on the largest music market in the world, the United States. They recruited Sean Parker 1 as an investor, and eventually used his expertise to work out a partnership with the 4 largest record labels in America.With Parser’s help, Spottily launched “Spottily Unlimited” and “Spottily Premium”. These were paid versions of Spottily service that gave the user an infinite supply of music to listen to. Shortly before the U. S.

Launch in June of 2011, Spottily partnered with Backbone, integrating their login profiles. This opened up Spottily doors to Passbooks huge library of advertisers, greatly increasing the profit margin for Spottily. Valued at around $1 billion with a new round of investing, Spottily reported 1 million paid subscribers shortly before the U. S. Launch.The United States launch proved to be a mass success, and Spottily still cleverly uses Backbone login and profile information for users to network with their friends ND share their music playbills. Spottily currently offers “Spottily Free” which gives the consumer unlimited listening on any desktop advice, with the occasional ad placement.

“Spottily Unlimited” is $4. 99 per month, and gives the user ad-free listening on their desktop or laptop computer. “Spottily Premium” is offered at a rate of $10 per month, is free of advertisements, and allows the user access to unlimited music-streaming on any platform, including smartness.Spottily now has 20 million ‘Free Users”, as well as 8 million paid users, located in 35 different countries, mostly centralized in Europe. Spottily 2012 revenue was Just shy of $600 million, and is currently showing a drastic improvement in 2013. Listed below are Spottily vision statement, mission statement, quality statement, and benefits to society, as they plan on taking on new international markets: “In the next 5 years, Spottily will be known as the leading music-streaming service all throughout the globe.We will be available in all countries with internet access, and a passion for music.

We pledge that where there is music, there will be Spottily. ‘ Spottily Mission “We want to connect millions of people with their favorite songs and create a revive that people love to use. We believe music should be easily accessible and that listening to music will make people live richer lives. Through our partnerships, we Ant to create a win-win situation for people who love listening to music and people “ho love creating music, and bring it to all Backbone users across the globe. Quality Statement ‘At Spottily, we value music as the highest form of art, from its ease of distribution, to TTS ability to transcend cultural barriers. With Spottily unique user interface, our brand values are the most important to us, as we believe that the music experience would be both enjoyable and professional at the same time. Thanks to our partnership with Backbone, we hold our own standards to the highest, as we continue to grow, attract new advertisers, and meet new customers every single day.

Benefits to Society “Spottily combats music piracy by providing a free service to consumers, which also puts money in the hands of the artists. This takes away the need for illegal file sharing, and brings music and culture into the ears of millions across the globe. Music can enrich anyone’s life with Just a single note, and at Spottily, we know we can make a difference. ” For more information, please refer to Exhibit 2. Ere Spottily Service The Spottily service is a simple, easy to use platform that is available to many Backbone users.There are 3 different versions of the service, each with different price ranges and benefits. They are: Spottily Free There’s not much better than cheap music, but if there is, Spottily has the answer.

Perhaps that answer is free music? To try “Spottily Free”, all one has to do is download the application onto his or her computer, and get started. No money is required, and no credit card is needed on file. From installation, the user is asked to going via Backbone, which allows for a quick, virtually instant registration with no hassles.Once the user is started, they may either enter a favorite artist in the search bar, search through Spottily huge collection of brand new albums, or look through the plastic of a friend for some good listening ideas. Thanks to Spottily Backbone Integration, all friends with Spottily are automatically synced, and sharing playbills and songs among one another is a breeze. With the recently added celebrity pages, users may follow their favorite musician, celebrity may be listening to, learn of new releases by particular artists, and discover ewe types of music that they may never have thought of.As a particular user begins to start listening to their favorite kinds of music, the Spottily service “learns” from the user’s preferences, and will suggest different artists of similar style for the purpose of discovery.

Another unique aspect of “Spottily Free” is the ability to synchronize tunes playbills with Spottily music. This gives the user the ability synchronize his or her own personal collection of music with any new music that Spottily can provide. As the music keeps rolling, users may create their own playbills for quick and easy access to ewe song they love, or a timeless classic that takes them back to better days.The possibilities are virtually endless, as Spottily is now fully up to date with their catalog of artists. If an artist’s music is available on tunes, Google Play, Amazon, or any other music distributor, it is most certainly available for listening on Spottily, and for free at that. Like many other free services, however, “Spottily Free” may have the occasional advertisement, but when the tunes are really bumping, it’s definitely hard to notice. “Spottily Free” is only available for laptops or desktops.

Spottily Unlimited Spottily Unlimited” is the right route to take when the user is a very frequent user of the service, but wants their experience to completely free of advertisements. Sometimes it is a little distracting when a user is in the middle of a masterfully- produced album, and they have to take a break in between every few songs in order to hear a 30 second advertisement. This actually makes performance of Spottily slightly faster, and will improve communication between listeners, artists, and their friends. “Spottily Unlimited” is available at a rate of $4. 9 per month, and may be cancelled at any time with Spottily “no commitment” guarantee. Spottily Premium While “Spottily Free” is certainly the most popular version of Spottily, “Spottily Premium” is hands-down the best value service provided. For Just $9.

99 per month, users get the advertisement-free experience of “Spottily Unlimited,” but they are allowed to take their music with them wherever they go. With Spottily smartened app, available for both ISO and Android, premium users may use their data plans to listen to Spottily in their car, in the airport, and virtually wherever they can imagine. Spottily Premium” also has the unique feature of offline listening, which allows sterner to create select certain songs, download them to their phone, and make them available even when there is no internet connection available. This is particularly useful for places with no internet, or even locations with no phone service, such as on an airplane, or in areas of town away from the cell towers. “Spottily Premium” is great for the music aficionados, and is certainly well worth the price tag for heavy users. Most music albums only have about 10 songs, and come at a price of $12. 9.

With “Spottily Premium”, users have access to an infinite number of songs, no advertisements, and around the globe access for the low price f $9. 99. For more information, please refer to Exhibit 3. For Spottily future endeavors into international markets, three different countries Newer selected, all with different pros and cons for expansion. All countries were fit for the newest Spottily introduction. Those countries are: Canada Primarily, Canada was chosen for its extreme similarity to the United States, which has proven to be world’s largest music market.Since Canada draws many similarities n their consumption of music, they were chosen.

In addition, many United States record labels have Canadian subsidiaries, so the issues facing music licensing and loyalties will be easily overcome. In fact, Spottily headquarters is based in London, and since both countries speak English, it will make business transactions very easy. Much like the United States, Canada is largely consumer-oriented, and their technology is always cutting-edge and up to date.This means that the idea of Spottily may be easily circulated. Also, considering Canada’s borders with the United States, some areas of Canada along the border have already been exposed to Spottily, though they cannot yet access it. According to the Acacia’s World Fastback, almost 10 million citizens are under the age f 24, which is the primary target market age group for Spottily services. It is also highly likely that this age group is the most active on Backbone and social media, Inch Spottily relies upon for its login and distribution means.

On top of that, Canada also has about 27 million internet users, which basically represents the entire potential consumer base for Spottily. As a combination of a parliamentary democracy, federation, and constitutional monarchy, Canada’s government type will not prove as a one that is difficult to work Ninth in Spottily expansion. One of the only thing going against Canada, is the fact hat the country is quite “spread out”, in that most of the largest cities are not geographically close, and there are many areas, particularly in the north, that are ‘ere sparsely populated.This could lead to poor word of mouth marketing for Spottily n the future. However, the overall process of globalization into Canada would be very low-risk. Russia Being the next on the list, Russia seemed to be higher risk than Canada, but still a great potential market for Spottily. Because of its long history as a country, and its ‘ere well-known music scene, Russia was chosen.

Especially with the rising of the ewe European music styles in popular music, Russian’s much larger population is a great consumer base for Spottily to base its future endeavors.According to the Acacia’s World Fastback, Russia has a large population of 142 million. However, due to the many still-rural areas of Russia, only 40 million of these people are internet users. Though the percentage of internet users in the entire population is low, Russia is still 10th in the world in total internet users. However, due to the low percentage, this may lead to poor word of mouth marketing for Spottily. Since the collapse of the Soviet Union, Russia has benefited from a newly-instated lovably-integrated economy.This has brought them up to speed as far as technology goes, and has really brought them in touch with the workings of the rest of the world.

Their government system is now a federation, in contrast to the socialist government that may have proved difficult to work with in international business. In addition, their geographical vicinity to headquarters in London could prove to be beneficial for maintaining optimal workflow and establishing brand Last, but not least, another significant country that would be of interest to Spottily is lapin.Usually one of the forerunners in the technology, Japan ranks 3rd in the world for total internet users, at almost 100 million. However, unlike Russian’s spread out nature, Japan is a very small country with a dense population of 127 million. This Mould make for great word of mouth marketing from person to person. Famous for coining the terms “J-rock and “I-pop”, Japan has a booming music culture that is beginning to make its own influence on the entire world. The Japanese people idealize many American musical acts, and can sometimes generate more demand than American audiences.

This huge demand for music in Japan is reason enough for Spottily to conduct business. On the other hand, Japan is not as reliant on Backbone as Canada or the United States, which is a significant part of Spottily login protocol. There is also well- established competition from pre-existing services such as Deana, which is already popular with Japanese youth. Though competition drives the market towards progress, it also makes the chance of failure much higher. Only about 22% of Japan’s population is under the age of 25, which could also diminish Spottily chances of success with the youthful crowd.Japan is affixed with a constitutional monarchy, which should also not prove too official to coerce throughout business transactions. However, one factor that may constantly be looming in the background is the general Japanese attitude towards honor, relationships, and trust.

Business in Japan is an ongoing process, rather than simple quick transaction, and it may be quite a lengthy process for Spottily to successfully establish a good reputation in this country.More information may be found in Exhibit 4 To determine which country would make the best fit for a new international market, they were compared and contrasted using the scoring system in the ‘comparison matrix”. Different risk categories were selected, and each category was given a weight based on how much of a factor that risk would be in the overall decision. After that, each country was given a score 1-10 based on their compliance Ninth each category. A score of “1” represented the most risk, while 10 was the lowest. Night of the risk categories was then calculated with the score, and each country Nas given a final score out of 1000.The highest score would be the least risk.

The categories, with their respective weights are as follows: -Disposable Income = 20% – This is the amount of extra money a consumer in each entry would be willing to pay for something like “Spottily Premium” – Technology = 15% – This is considering what types of technology are available in each country -Legal = 10% – This refers to the possible legal issues that could arise due to licensing -Competition = 30% – This is pretty self-explanatory, as it signifies what other services are already established in Spottily prospective market.This is the most significant factor for Spottily, as, since it’s a free service, it cannot have any more -Government Type = 10% – Since the government plays a part in any business transaction, this could be a large factor. Exchange Rate = 15% – Since dealings with be international, different currencies Nail be used in business transactions. *Each country was then given scores in each category, based on the risk being faced. To view the entire comparison matrix, please see exhibit 6.The scores for each country are as follows: Canada Disposable Income: 9 = Canada is not a very destitute country, and in fact, their economy is quite alive and well at the time. This is probably the most ideal market for “Spottily Premium”.

Technology: 9 = Much like the United States, a very large percentage of the population is an internet user, and this is a huge factor in how Spottily is made available. Technology is very up-to-date here. Legal: 8 = Due to all 4 major US record labels having subsidiaries here, the legal aspect of licensing songs should not be of any trouble.The only trouble could be smaller US labels not available in Canada. Competition: 8 = Upon research, there is not much competition for Spottily, with the exception of Pandora. However, Pander’s service is a bit different, and does not need to be seen as a direct competitor, but rather something that can be used conjunctively with Spottily. Government Type: 7 = Though not terrible, due to Canada’s government system, taxation on licensing and business transactions is higher than some other countries.

Exchange Rate: 9 = The Canadian dollar is not terribly different than the American dollar.It also proves easy to convert, as in some high-tourist areas, such as Niagara Falls, American currency is regularly accepted anyways. Total for Canada: The score was then multiplied by the weight for each category, and a total score of 840 was given for Canada. Russia Disposable Income: 6 = Though Russia sports a very low unemployment rate, their bevel of poverty is much higher than Canada, so a lower score must be given. Technology: 7 = Although Russia has one of the largest internet-using populations, there is still only a small percentage of the population that actually uses the internet. His is due to some of the more rural areas of the country Legal: 5 = Licensing of music would be quite difficult out here, as Russia does not have a well-established music industry itself. Instead, it relies upon international subsidiaries of major record labels for music.

Therefore, licensing may be difficult. Competition: 7 = Backbone itself has some competition out here, as some large Russian social networking sites, such as VS. are widely used. However, the music- streaming competition is scarce.Government Type: 5 = Due to Russian’s government, there’s quite a bit more complications in starting a business here than there could be elsewhere. It’s high risk and must be taken into account accordingly. Exchange Rate: 5 = Complications with the stability of the Ruble can play a part in the future of the international business affairs.

Money can either be gained or lost depending on the conversion rate at the time of transaction. This is a high risk. Total score of 600 for Russia. Japan Disposable Income: 9 = Japan is a pretty well-off country, and sports a low unemployment rate.Many Japanese consumers value the latest and greatest technology, and as a country, spend more disposable income on luxury goods and services. Technology: 9 = Japan is a major player in the technology market, and is always coming up with new innovations with technology. In addition, Japan has one of the highest populations of internet users.

Legal: 6 = Although many US record labels do have dealings in Japan, the work involved is intricate and could lead to possible licensing issues. Competition: 6 = Companies such as Deana have already established themselves as music-streaming services in Japan, therefore competition might be tough.On the other hand, if there’s competition, that means there is a demand for something like Government Type: 5 = Not only Japan’s government, but their take on honor and trust could play a big role in the both the government side and the business dealings. One wrong move could set Spottily on the bad side of Japan’s government. Exchange Rate: 5 = Much like the Ruble, the exchange rate of the Japanese Yen is constantly fluctuating, and could either prove beneficial or detrimental based on En each business transaction is conducted. All risk is assumed here.Total for Japan: The score was then multiplied by the weight for each category, and a total score of 670 for Japan.

After all scores were taken into account, it became apparent that Canada was the true victor here with its score of 840. By that score, Canada demonstrates that as a country, it proves the least risk and lead to massive international potential. Therefore, Canada will be selected as the next target market for international business, and further steps will be taken. For carrying out the actual process of opening into Canada, several different entry trainees were considered.While Spottily is technically distributed online, they must establish themselves in every country they are available for multiple reasons. The first reason would be for the ease of dealing with licensing fees and contracts with record labels. Since Spottily is already carried in quite a few different countries, it Mould be beneficial to have an office that is capable of speaking the language of the country and knowing the market of the country.

The second reason Spottily must establish itself in each country is to create relationships and draw up contracts with advertisers.Since the majority of Spottily users rely on the free experience, most revenue is actually generated from advertisements. It is essential that Spottily generate advertisements that are both specific to the country that they are located in (I. E. Not for instance, having an advertisement for a Swedish chain of restaurants in Spain). It is also essential that these reason, a short-term and long-term entry strategy was drawn up. Short-Term Strategy – Joint Venture Assuming Spottily will be a new sensation for the many people of the new country, it may be hard for Spottily to get its feet wet.

With a Joint venture, Spottily can partnerNinth a large marketing firm or advertisement company for the ease of quick access to advertisers. Profits will be split 51/49, in favor of Spottily, as they are assuming more risk. This will provide an excellent means for Spottily to get right back on the track of generating more revenue. For clerical purposes, this short-term strategy is to be used for the next 3-5 years, until Spottily is capable of changing its strategy into the long-term. Long-Term Strategy – Wholly-owned Subsidiary After 3 years of a Joint Venture, Spottily will buy out their partner with the revenue they have generated.After 3 years’ time, Spottily should already have a good reputation in the area, especially considering how fast they grew in America. The pros of this idea are that Spottily will be able to keep full control over all of their operations, while minimizing their risk for technology loss.

While Spottily would now be assuming more overall risks as a wholly-owned subsidiary, it is likely that Spottily other subsidiaries in other countries can cover any sort of loss. As a wholly-owned subsidiary, Spottily will be now be compliant with the rest of the business, and will now be like the many other subsidiaries in other countries.Ultimately, this is the best way to keep up their current business flow, and will allow for maximum profits. For more on entry strategies, please see Exhibit 8. When discussing a certain company’s market responsiveness versus their cost responsiveness, there are basically 4 different strategies that can be adopted. The first type of strategy occurs when a company has low market responsiveness and low cost responsiveness. This is known as an “International Strategy’.

This type of company produces luxury goods, as people will buy them regardless of price Just for the premium price tag.A good example of this type of company would be Ferreira. The second type of strategy occurs with low market responsiveness and high cost responsiveness. This is known as a “Global Strategy’. A good example of this type of company is Coca-Cola. This company is known for having a universal product that is unchanged despite the market. However, Coca-Cola must still adapt some of their products by changing labeling, and other aspects to correlate with the culture of the country.

The third type comes from a high market responsiveness and low cost responsiveness. This is known as a “multi-domestic” strategy.

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