Case Analysis – Spotify

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October 12, 2020
Case Analysis – Spotify
Understanding the relationship between social and cultural aspects of society in line with a company's management is essential for any manager. It allows him to make strategic decisions based on the external factors that affect one's financial performance. In this article, the author would like to focus on the case of Spotify. As one of the largest music streaming companies in the world, Spotify would have produced billions of dollars in profits. However, based on recent reports, the company has been struggling to make profits despite its large consumer base and its diverse selection of music worldwide. In the subsequent sections of this paper, the author would like to focus on the company's financial performance and the societal factors that caused its difficulty in making a profit. All in all, he believes that one of the main reasons for this difficulty is the system of royalty.
Spotify Case Analysis
As stated earlier, one of the main problems that Spotify is trying to address is the problem of profitability. Although the company reported a $200 million in ad revenue and $1.5 billion in terms of premium subscription back in 2019, its profits have dwindled down due to the increasing price of royalties that artists are trying to recompense CITATION Thu19 \l 1033 (Thurrott). Additionally, a recent report showed that these two primary revenue sources have declined due to the current pandemic. Notably, the company's cash flow statement shows that ad revenues and premium subscriptions have declined by around 15% for almost all marketplaces worldwide CITATION Per20 \l 1033 (Perez). Accordingly, the company's recent quarterly financial report shows a steep decline in terms of its earnings per share, which...