SWOT Analysis of Spotify: Strengths & Weaknesses 2021

NameSpotify Technology S.A (NYSE: SPOT)
IndustryInternet media and services
HeadofficeLuxembourg (Executive offices), Stockholm (Operational offices)
CEODaniel G. Ek
Revenues€ 7,880 Millions, 2020,  € 6,764 Millions, 2019
Net losses€ – 581 Millions, 2020,  € -186 Millions, 2019
Competitors Apple Music, Soundcloud, Amazon, Napster, Deezer, Pandora, and Youtube Music, Netflix

Company Overview:

Spotify is two-sided music streaming marketplace that provides personalized digital music services for users and creators worldwide (Spotify, 2021). The company generates revenues through the freemium model, including Ad-supported services and premium services. The Ad-support provides unlimited online access and the premium segment provides unlimited offline and online streaming access to an extensive music catalog (Bloomberg, 2021). In 2021, Spotify has a brand value of $8.3 billion, ranked 91st in most valuable European brands, and ranked 99th in the top 100 most valuable global brands (SyncForce, 2021). Let’s now go over the SWOT Analysis of the company.

Spotify Strengths 2021:

  • Diversified and increasing revenues.

    In 2018, Spotify had revenues of €4,717 Million from premium services which increased to €6,717 Million in 2019 and €7,135 Million in 2020. Likewise, the revenues from ad-supported services were €542 Million in 2018, which increased to €678 Million in 2019 and €745 Million in 2020, as shown in the diagram below 

  • Extensive and personalized music collection.

    Spotify uses algorithms to manage users’ preferences, enabling customized playlists and searches for the songs. Ingham (2021) pointed out that the company has 16 Billion artists and 70 million songs in the digital library. Moreover, the company adds 60K new songs every day to its database, almost one song per second. 

  • Multiple successful strategic acquisitions for growth.

    According to Spotify (2021), Spotify has successfully acquired numerous companies for €723 Million from 2018 to 2020 to improve the product offering. In 2019, Spotify acquired Anchor FM (software studio), Gimlet media (podcast content), and Cutler Media (podcast studio). Likewise, in 2020, the company has acquired Bill Simmons media (entertainment and pop content studio), Megaphone LLC (podcast technology), and The Ringer (content studio). 

  • Global outreach and 345 MAUs (monthly active subscribers).

    Spotify has a presence in 93 countries, including the US, Sweden, Denmark, the UK, France, Italy, Canada, etc. Szalai & Vlessing (2021) discussed that the platform has 345 million monthly active users (MAUs), 158 million subscribers are paid. 

  • Significant market share and leadership.

    Spotify is a pioneer for the on-demand access to stream music business model and has the industry’s highest market share of 30%, as shown in the diagram below. Spotify has created a strong brand image through its simplified business model, high-quality content, an extensive library, and high visibility (Forbes, 2021). 

Spotify Weaknesses 2021:

  • High bargain power of suppliers.

    Spotify has no control over the contents provided by third parties. Spotify (2021) discussed that the control concentration over suppliers could unilaterally affect the company’s access to music. Spotify works with the right holders, and it is up to a third party to license the company. For instance, the high concentration level in the music industry such as Sony Music, Universal Music, and Warner Music means music creators can choose an alternative platform. 

  • Royalties’ challenges.

    Spotify pays royalties to publishers, record labels, and copy owners under relevant statutes and license agreements to stream content. Savage (2021) analyzed that Spotify pays £0.002-0.0038 per stream compared to £0.00052 by Youtube and £0.0059 by Apple music. 

  • Google cloud reliance for business.

    Spotify relies on the Google cloud to manage business operations and store all data. Spotify has designed systems and software to utilize the Google infrastructure platform, and disruption to Google services could affect Spotify’s operations, business, and financial results (Spotify, 2021). 

  • Cost and speed of internet connection.

    Spotify streaming services require high bandwidth data capabilities to deliver high-quality audio and other content. Powell (2021) pointed out that high bandwidth internet access is fundamental for Spotify service delivery. Limited access and the high cost of data could impact the result of operations. 

Spotify Opportunities 2021:

  • Partnerships and alliances.

    Spotify has spent €723 Million on the strategic acquisition, a costly and time-consuming process. Sebastian et al. (2021) appraised that the company should rely on partnership and alliance for business growth. The partnerships provide new resources and tackle strategic challenges from more prominent players such as Apple and Amazon. For example, Spotify can develop a partnership with Samsung to access mobile devices and ride-sharing platforms to expand the music stream industry. 

  • Business diversification.

    According to Businesswire (2021), it is estimated that global video content will reach $185.6 Billion with a CAGR of 40.5% by 2026. Spotify has the opportunity to enter the video streaming industry, providing new income sources and expanding the business market. The video industry would find ways to monetize services by retaining and monetizing the new user base (Forbes, 2021).

  • Expansion in new global markets.

    Spotify operations are concentrated in the western markets. For instance, Europe represents 62% of Spotify subscribers, the US has 45%, and Latin America has 33%. As shown in the diagram below, Reis & Martinssep (2021) stated a limited presence in the Middle East and emerging markets such as India and China. Thus, there is an opportunity for Spotify to expand in the Middle East and Asian markets for business growth. 

Spotify Threats 2021:

  • Transfer pricing and tax issues.

    Spotify is a multinational company subject to various countries’ taxation regimes. According to Spotify (2021), the company is subject to transfer pricing rules and the arm’s length principle in most jurisdictions. Moreover, the company carries forward losses of €461 million in the US and €1,293 million in Sweden. However, the losses carry-forward are not allowed in certain jurisdictions. 

  • Intellectual property infringement.

    The Spotify platform provides services for artists, creators, podcasters, i.e. subject to risks of intellectual property infringement. Firestone (2021) pointed out that third-party risks such as unauthorized authorization of right holders can result in legal disputes and costs. For instance, Rockband ‘Crackers’ has filed a lawsuit against the company for $150 million, and in 2018, it had $1.6 Billion infringement lawsuits during 2018 (Messer, 2019)

  • Software technical issues and data breaches risk.

    Spotify software has a technical risk associated with the development and functionality of the company App. Smith (2021) highlighted that the Spotify Apple update had a battery issue on iOS 15. Users reported battery drainage after the software update. The unauthorized access to software and data would result in statutory fines, civil liability, and loss of customer confidence in the brand. With GDPR (General Data Protection Regulation), the company needs to manage data subject rights, data breach notification, and data transfers.  

  • Lack of profitability.

    Despite increasing revenues, Spotify has yet to make a profit. As shown in the diagram, the company has growth priority over profits and accumulated losses over the year. 

  • Intense competition.

    According to (Forbes), there is fierce competition in the music streaming industry because multiple players such as Apple Music, Soundcloud, Amazon, Napster, Deezer, and Pandora have entered the industry. The numbers of factors that contributed to the success of Spotify are content diversity, quality of experience, price, and ease of use, brand awareness as well as visibility in the market. 


SWOT Analysis of Spotify Conclusion: 

Spotify’s challenges include intense competition, lack of profitability, fierce competition, royalty issues, and third-party dependence. Despite the challenges, the large market share, MAUs, and brand loyalty have contributed to the company’s growth. Spotify has the market knowledge and dynamic capabilities to overcome its weaknesses. The development of new partnerships and expansion in new markets provides future growth potential, broadens customer base and revenues, and outperforms competitors in the music stream industry. 


  1. Bloomberg (2021). Spotify Ltd.
  2. Businesswire (2021). Global Digital Video Advertising Market (2020 to 2026) – by Type, End-user, Region, Industry Analysis and Forecast
  3. Firestone, Jared (2021). Spotify Faces $150 Million Copyright Infringement Lawsuit.  
  4. Forbes (2020). How To Outperform Your Competitors Like Spotify. 2020. 2021.
  5. Forbes (2021). Is Diversification Still The Best Strategy? 
  6. Forbes (2021). Spotify Adds 12 Million Paid Subscribers, Strengthens Visual Brand Equity As Q4 Revenues Play Catch-Up
  7. Ingham, Tim (2021). Over 60,000 tracks are now uploaded to Spotify every day
  8. Messer, Lesley (2019). Spotify hit with $1.6 billion copyright infringement lawsuit
  9. Powell, Matt (2021). What broadband speed do I need for Spotify, Apple Music, and other music streaming? 
  10. Reis, Bruno and Daniel Martinssep (2021). Why Global Expansion is Key for Spotify’s Success
  11. Savage, Mark (2021). MPs call for complete reset of music streaming to ensure fair pay for artists
  12. Sebastian, Ina, Peter Weill and Stephanie Woerner (2021). Partnering to Grow in the Digital Era
  13. Smith, Chris (2021). Spotify on iOS 15 is destroying people’s iPhone battery life
  14. Spotify (2021). Annual Reports – Financials
  15. Statista (2021). Market share in music streaming industry.
  16. Statista (2021). Spotify losses. 2021. 2021.
  17. SyncForce (2021). Spotify – Rankings per brand. 2021. 2021.
  18. Szalai, Georg and Etan Vlessing (2021). Spotify Hit 158 Million Paid Subscribers at End of March

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