Affiliation

How they do it: In 2014, Spotify discontinued its affiliate program. It allowed users to refer their friends to the service. After five of their friends signed up to Spotify, the referring user received a free month of Spotify.

Flat Rate

How they do it: On Spotify, users are unable to purchase individual songs or albums. Rather, they gain access to all songs on their platform for a flatrate, monthly fee.

Freemium

How they do it: Spotify is a freemium service; basic features are free with advertisements or limitations, while additional features, such as improved streaming quality and music downloads, are offered via paid subscriptions.

Leverage Customer Data

How they do it: Customer data in Spotify is used to give the listeners individualized recommendations of what other music might be interesting to them as well as recommendations for live performances of their favorite artists.

Long Tail

How they do it: Spotify features a library of tens of millions of songs, with 20,000 songs added daily. The library features high-profile acts with hundred of millions of ”listens” as well as less-know musicians, whose songs attract less than a couple of thousand ”listens”.

Mass Customization

How they do it: Spotify creates millions of playlists that are customized to the individual customers. These include for instance ”Release Radar”, a playlist personalized to the music taste of the respective user.

Rent Instead Of Buy

How they do it: On Spotify, users are unable to purchase individual songs or albums. Rather, they gain access to all songs on their platform for a flatrate, monthly fee. Access is granted based on the membership and not via a purchase, making music consumption more flexible for customers.

Subscription

How they do it: Users gain access to all songs on Spotify’s platform for a flatrate, monthly fee of approximately $10 per month. This enables users to access the vast library at any time and without any limits.

Two-sided Market

How they do it: Spotify maintains close relationships not only with it’s customers (paying and free users of the Spotify platform), but also with a set of crucial stakeholders, the rights holders of the content. It distributes approximately 70% of total revenue to rights holders, who then pay artists based on their individual agreements.