PESTLE Analysis of Spotify. Spotify is a Swedish audio music stream and multimedia service providing multinational company. Daniel EK and Martin Lorentzon laid the foundation of the music streaming platform on 23 April 2006. The headquarter of Spotify is situated in Stockholm, Sweden.
Spotify’s main products and services are as follows;
- Music Library
- Digital Music
- Video Services
Key statistical facts and figures about the audio streaming platform are as follows;
- The annual revenue of Spotify was 12.356 billion Euros by the end of 2022
- The net income of the music streaming platform was -0.453 billion Euros
- Approximately 6554 employees are working for the platform to manage its worldwide operations
Some of the top competitors of Spotify are as follows;
- YouTube Music
- Apple Music
- Prime Music
Today, we’ll discuss the PESTLE analysis of Spotify. It would analyze the political, economical, social, technological, legal, and environmental factors. Here’s the pestle analysis of Spotify as follows;
Political Factors Impacting Spotify
Some of the key political factors in the pestle analysis of Spotify are as follows;
Spotify is an online music streaming platform and the platform is streaming across the world without any geographic barrier due to its online nature. Some of the songs on Spotify have rebellious content in them, and that’s why authoritarian regimes don’t welcome them. For instance, Spotify suspended its platform in Russia because of the ongoing war between Russia and Ukraine. Resultantly, the platform lost a significant number of users.
Spotify is running its platform in various countries across the world. Many tyrannical governments and corrupt bureaucracies could introduce new policies and procedures for the platform like banning certain types of content. It would make it difficult for the platform to run its business and offer the optimum level of steaming services.
The taxation policy of different governments is different for the online platforms. For instance, if the country imposes more taxes and duties on online platforms, then it would decrease the revenue and income of the platform. Low profitability would compel the company to decrease its budget for R&D.
Economical Factors Affecting Spotify
Some of the main economical factors in the pestle analysis of Spotify are as follows;
Requires Net Banking
Spotify is a paid music streaming platform. In order to get access to the music library, users need to pay to the platform. That’s why Spotify requires a strong and active online banking system in the host country in order to complete transactions with its customers. Otherwise, users have to employ any third-party financial application to pay to the platform. It is not an easy option for many users.
Relying on Economy
The growth and profitability of the online music streaming platform are highly dependent on the economic circumstances of the country. It is because music is a luxury item, and they would only pay for it if they were well-off financially. High inflation and the unemployment rate would negatively impact the subscription and user rate of the platform.
If the host country suddenly increases the interest rate, it would attract the attention of customers to deposit their money into the banks. Limited spending would decrease the revenue and profitability of the platform.
Social Factors Impacting Spotify
Some of the key social factors in the pestle analysis of Spotify are as follows;
Social Norms & Music
Many social, cultural, and moral values directly impact Spotify. It is because Spotify is a music streaming platform, and not all cultures and religions welcome music and some of them prohibit it. Before launching its platform into any market, the platform should analyze cultural taboos and norms about the music.
It is important to mention here that music is widely popular among young people, rather than the elderly and middle-aged people. If a consumer market doesn’t have a young population, then the consumption rate of music would be low.
The spending habits of different people in various regions and countries are different. Some people would love music and other luxury items and others won’t. For instance, Swiss people save roundabout 19% of their income, which is the highest saving percentage. The growth rate of Spotify is higher in those countries where the saving rate is lower.
Technological Factors Affecting Spotify
Some of the main technological factors in the pestle analysis of Spotify are as follows;
The revenue of Spotify is highly dependent on technology and internet service. The company has made its platform applicable to all types of devices. If we study the adoption of technology in various countries across the world, then it has increased significantly to a great extent; it is a great sign for the growth of the company.
Integration with Social Media
Social media platforms have got the highest numbers of users; Spotify has successfully integrated its platforms with social media channels. It would help the company to penetrate different consumer markets and amplify its user base.
Legal Factors Affecting Spotify
Some of the key legal factors in the pestle analysis of Spotify are as follows;
Privacy issues are the major concerns of many people while sharing their personal banking information with any online platform. Spotify has got millions of paid users on its platform and it poses a significant amount of responsibility on the platform to save their private data. In case of violation of privacy laws, the platform would have to face costly lawsuits and heavy fines.
Laws & Regulations
The consumer protection rights of different governments are different. The platform should be aware of them and follow those laws and regulations. Otherwise, it would jeopardize the growth of the company.
Environmental Factors Impacting Spotify
Some of the main environmental factors in the pestle analysis of Spotify are as follows;
Spotify runs on various electronic devices and they consume electricity and emit carbon into the atmosphere, which means that the company is causing pollution. Many tech companies are facing the challenge of converting their platforms into renewable energy and decreasing the carbon emission rate.
Conclusion: PESTLE Analysis of Spotify
After an in-depth study of pestle analysis of Spotify; we have realized that Spotify is the world’s leading online music streaming platform. If you are learning about the external factors impacting the platform, then you should keep in mind the abovementioned political, economical, social, technological, legal, and environmental issues.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.