The Transformation of the Music Industry, Examining its Future Prospects in Particular– Spotify

Abstract

This paper examines the transformational role of Spotify in reshaping the music industry, from the digitisation of music in the 1990s to the dominance of streaming services today. Spotify's freemium model has fundamentally altered how music is produced, consumed, and monetised, redefining traditional revenue-sharing practices between artists, record labels, and streaming platforms. The paper also explores the broader technological shifts that paved the way for Spotify’s success, beginning with the introduction of CDs, the disruption caused by Napster, and the rise of digital downloads through platforms like iTunes. As streaming continues to be the dominant mode of music consumption, Spotify's global reach, data-driven personalisation, and adaptive business strategies have cemented its leadership in the digital music landscape. The analysis also delves into the challenges Spotify faces, particularly regarding thin profit margins, artist compensation, and growing competition from rival platforms. Through SWOT and Porter’s Five Forces analyses, the paper assesses Spotify’s current strengths, weaknesses, and future prospects, offering insights into how the company must navigate competitive pressures and industry dynamics to maintain its market leadership.