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Throughout of the 2000’s, w hen new

Throughout the years, the music industry has been through different stages. At the beginning, it consisted solely on live interpretations which gave access to the content while being present at the performance. Then, the possibility to record music came into existence. Starting with the rubber and vinyl discs, continuing with the promotion of these recordings by the use of the radio, later with the cassette tapes, and lastly with the introduction of the CD’s. The following phase consisted on a digital and online distribution (buying the music online) which provided both a legal and illegal market. An easy online distribution of music caused the illegal market to grow exponentially negatively affecting the revenues of the music industry. At the same time, legal platforms (for example itunes) fought back and became an important way of maintaining legal online platforms, as consequence, giving revenues to the industry. Eventually, the digital distribution became the main way for providing music. The last big step was the introduction of streaming services, that even if these are considered part of the digital distribution, they created a big innovation and a different way to take part within the market. Audio streaming as defined by Khosrowpour on the Dictionary of Information Science and Technology (2013) is the music that instead of being reproduced from a local hard drive, is streamed through networks, that means listening to music online. These platforms were introduced at the beginning of the 1990’s with radio online streaming, but started to grow in relevance at the end of the 2000’s, w hen new platforms for on-demand music (not only online radio streaming) were introduced. Another important feature that offered these new platforms were a peer-to-peer network, where the file is also loaded by others users enabling it to stream faster, although this characteristic has decrease in use as many companies (such as Spotify) have potent servers that achieve the same effect.At the moment music streaming services are growing rapidly and are becoming a pillar of the music industry in its entirety. By its recent constant growth and the big impact they generate, streaming music services can be considered a relative new issue. According to the global music report created by the International Federation of the Phonographic Industry (IFPI) (2017) digital revenues accounted for 50% of all the recording industry global revenues on 2016, compared to 2015, digital revenues grew up 17.7% mainly by the 60.4% growth in streaming services (considered the largest growth in 8 years). Within the streaming service market there are different platforms that have a share. According to the MIDiA’s Streaming Services Market Shares Report (2017), on 2016 Spotify had the 35% of the total subscriber market share having a $2,766 million in retail revenue, making Spotify the leader within this market, look at appendix 1. For the reason before explained, Spotify can be considered the greatest influencer on the music streaming market. When talking about digital platforms it is important to include the phenomenon of the sharing economy. The sharing economy is described as a way for people to obtain, give and share access to goods and/or services using digital platforms. This sharing economy can help explain how the market in which digital platforms occur and their effects.The role of Spotify within the music industry and the sharing economy creates issues and questions. For this paper the central question that is meant to be answered is “To what extent is Spotify part of the sharing economy and how has it impacted the music industry?” can be established.A literature review in a form of a case study will be used to answer this question. The literature consisted on academic articles, news and analysis on streaming services and Spotify. The case study was focused on Spotify.The central question will be aimed to be answered on the theoretical framework, within different sections. First, the main characteristics of Spotify, how supply and demand takes place within the same, how does it claims to contribute to the sharing economy and its level of success will be explained. Secondly, an opinion based on research will be given to discuss to which extent does Spotify contributes the sharing economy and if the platform violates any regulations. Thirdly, an hypothesis will be formulated. After the theoretical framework, a conclusion of the findings will be given.Theoretical frameworkThis section gives a general background of Spotify, a discussion regarding Spotify’s contributions to the sharing economy and a hypothesis regarding the central question. The core activities of the digital platform are explained, its ownership, number of users and the link of Spotify with the network effect model. Following, the description of how the the platform is a match between supply and demand as well as main functions of it are discussed. Later, it is detailed how Spotify is involved within the sharing economy, its stake in the collaborative consumption and its function as a social network site. On the next part, it is described how Spotify successful in accomplishing an impact on the overall music industry. Consequently, it is discussed how the platform is involved within the sharing economy and if the platform violates any regulations. And lastly, a hypothesis is formulated, limitation of the research are stated and future recommendations are addressed.2.1 Descriptive/analytic The digital platform Spotify was founded in 2006 in Stockholm, Sweden, but it was not until October of 2008 that the platform was officially released within Europe. There were two founders, Daniel Ek and Martin Lorentzon who created the project. At this moment, both of them are the largest owners of the company (Daniel Ek being the CEO), followed by various investors and different music labels that have acquired a stake. On june 2017, Spotify announced that there were approximately 140 million monthly active users (both paid and free subscribers) and as of 4 january 2018, 70 million paying subscribers (Plaugic, 2018). The platform has a link with the network effect model. Birke (2009) states that a network effect exists if a consumer’s utility, when using a product, increments with the number of other consumer making use of it. Lüftenegger Comuzzi and Grefen (2013) go further, they support the point that in Spotify’s ecosystem a network effect is produced when users deliver more content to others through the same, and a cross-side network effect when content created by application developers generates value for the users as the listening choices are improved. Spotify functions as a match between supply and demand. This can be explained by showing how the business model of streaming services takes place. According to Trefzger (2015) the streaming music business model is an innovative and effective one for making the link between the company, services given and customers. Streaming music offer access to all the music library and depending on the subscription (free or paid) additional benefits are available, possibility to listen the music offline, for example. The revenue streams from this subscriptions comes from advertisement, on the free version, or via payment of a subscription, on the paid version. The music library (content) is provided by music licences acquired by the platform. Furthermore, as Diaz (2017) explains, inside Spotify a user understanding function is used to the recognize the users behaviour, interaction and tastes. He continues by saying how when a customer expresses a specific music need, the platform automatically offers the user personalized recommendations that would most likely fit his/her criteria. Trefzger (2015) also describes how streaming services act as intermediates between the consumers and the creators of the music. These streaming services are used online or as downloaded app, namely websites or software applications. Trefzger (2015) states that according to his interviews, streaming platforms are used majorly on mobile devices. As previously described in the introduction, the sharing economy has a direct effect on the use of digital platforms and can help explain how the market in which digital platform occur as well as their effect. For further understanding the word “sharing” within sharing economy the term collaborative consumption is pointed out (Hamari, Sjöklint & Ukkonen, 2016). As Felson and Spaeth (1978) explained, collaborative consumption are events in which one or more individuals consume services or goods while being involved in correlated activities with others. For these effects Spotify can also be understood as a social network site. According to Ellison (2007), a social network site consists of three parts. It is a web service that enables individuals to (1) create a public/semi-public profile within certain system, (2) form an archive of other users who they share a connection with, and (3) the possibility to glimpse and navigate to their archive of connections and those connections made by other users. Within Spotify’s platform there is a constant interaction between users. When subscribing into the platform, users create a profile which allows them to save content (playlists, saved music and search history) and get in contact with other users, by adding them as contact and/or sharing their content. Besides from Spotify being a streaming (digital) platform where people obtain and give access to services, when incorporating the social media aspect, Spotify is also a platform for sharing content.It is important the denote the success of Spotify to exemplify its relevance within the music industry. For the matter of this paper, “success” is defined as the accomplishment to impact the overall music industry. The success of Spotify can be obtained mainly by the number of users in the platform compared to competing ones affecting the general music industry. Although Spotify is the second largest streaming service (2017 Music Consumer Insight Report, 2017), Youtube being the number one, it is the revenue leader in the market (MIDiA’s Streaming Services Market Shares Report, 2017). The aspect of the revenues is of great important because the music industry is based on them, therefore it has a greater effect on the music industry than just the fact of having more users. Following, as previously detailed in the introduction, streaming services were accounted to provide the most income within the digital music industry and the digital music industry was the largest revenue stream within the global recording industry on 2016. This exemplifies the importance of Spotify on the global music industry. Furthermore, Spotify’s success is deeply linked to its customer satisfaction and its popularity. As explained by Kristinsdottir, Larusdottir and Cajander (2016), according to their interview to Spotify Product Owners, customer satisfaction is directly related with the number of users within Spotify which is a direct measurement of success. They say that if users are not satisfied, there would be a decline of the same, that would mean a decline of Spotify’s success. 2.2 DiscussionAs previously explained in the descriptive/analytic sub-section, the phenomenon of the sharing economy has a direct effect on Spotify, related to the collaborative consumption concept and the social network functions of the platform. In this sub-section, it is further discussed how people obtain, provide and share access to music using Spotify related to the effect on the music industry, this will create a concrete base on how the platform contributes to the sharing economy while considering its effect on the music industry. According to Lin (2017), Spotify is involved in a two-side market: the market in which to “sell” the music to the users and the one in which to “buy” from the right holder. This illustratrated how Spotify is the intermediary between sellers and buyers, supply and demand. The obtaintion of music by people on Spotify can be seen as the demand. As explained before, Spotify has two forms of subscriptions, free or paid, which offer different benefits. When users subscribe to the platform, by any of the subscriptions, they can automatically obtain music from the same. Even if the two subscriptions have different effect for the music industry, the combination of both create revenues in total. The free memberships cause a negative effect in revenus for the industry, by the other hand, paid memberships outweigh those costs and produce positive revenues overall (Wlömert & Papies 2016). Furthermore, when talking about the provision of music, right holders (artists and labels) are the ones that can be seen as the supply. For each song reproduced, Spotify pays a license fee to the copyright holder. Additionally, during this interaction there is a positive network effect that affects the music industry. As Spotify acquires its essential element for providing the service (the music), on the other hand, artist receive revenues and exposure within the platform creating more popularity to the artist (Riesewijk, 2017). Lastly, as explained before, Spotify can also be considered as a social network and it is linked to the collaborative consumption. Within the platform a consumer ecosystem is enhanced by the uniqueness of each users profile and the overall experience created. As stated by Jacobson, Murali, Newett, Whitman and Yon (2016), the personalize music experience is one of the most important aspects of users involvement with the platform and of great importance for the creation and consumer ecosystem. The effect for the music industry are reflected by a positive network effect, when having more satisfied consumers, those consumers will attract others.There is also another face of Spotify. The platform has confronted legal issues as well as artists complains. At the end of 2015 and beginnings of 2016, Spotify received two separate lawsuits by musicians for copyright infringement. The first consisted of  a class action field in a court of California by David Lowery. He argued that the platform violated his rights of reproduction and distribution under copyright law, by allowing users reproduce Lowery’s content without paying for it. Two weeks later, Melissa Ferrick filed another lawsuit in a federal district court in Los Angeles. She stated that Spotify copied her music making it available at the platform while failing to obtain a license (Whorton, 2017). A more recent lawsuit, filed in january of 2018, is the one by Wixen Music Publishing against Spotify. Wixen alleged that Spotify made use of artists’ music without having a license nor giving a compensation for it. At this moment, Spotify faces other three lawsuits in the State of Tennessee for, as being accused, making use of songs without paying royalties . (Pham, 2018).Furthermore, Spotify has faced the unconformity of artists as various have removed their albums from  the platform. The more eminent issue is that artists feel that the monetary value of their work is not being respected by the service. One of the most renowned cases is the one of Taylor Swift. She explained that she abandoned the platform, presuming that it negatively impacts the value of what musicians create (Quinn, 2017). Although at the end she return to the platform, it raised concern within the industry.2.3 Hypothesis / RecommendationAfter the literature and discussion given, a hypothesis to the central question can be stated. Central question meant to be answered: To what extent is Spotify part of the sharing economy and how has it impacted the music industry?. Hypothesis: Spotify is directly a part of the sharing economy as being a streaming (digital) platform in which people can obtain, give and share access to music (service) as well as having an important impact on the music industry as being the platform with more revenues and growth within the biggest sector of the music industry.Besides, there are certain limitations to the research that make the hypothesis previously stated a provisional answer. The most evident limitation is that this article is based purely on a literature review. This causes to completely rely on previously published research and the availability of these studies. As an effect, not all information searched could be as current as needed, mainly because Spotify experiences constant changes throughout short periods of time (years and months) and not all articles contained findings that were, in its totality, up to date. On the other hand, within the literature review, various empirical studies doesn’t exist, mainly regarding the interaction between Spotify in the sharing economy. Also regarding empirical studies, it was difficult to obtain information showing a global perspective which impacted the global music industry. In its majority, the analysis were limited to the countries with more streaming service activities. Additionally, because the sharing economy and the platform are relatively recent, a long term impact is missing, as consequence, the same long term effect impact into the music industry cannot be found. After analysing the limitations, a question for further research and a hypothesis can be formulated. Central question: To what extent is Spotify involved within the sharing economy and how has it impacted the music industry in major streaming countries?. Hypothesis: Spotify is involved as a platform within the  sharing economy as being a streaming (digital) platform in which people can obtain, give and share access to music (service) as well as having an important impact on the music industry in major streaming countries as being the platform with more revenues and growth within the biggest sector of the music industry. Furthermore, future research should center on empirical research. This empirical research should focus on Spotify as a platform within the sharing economy and on obtaining information regarding Spotify as current as possible. Apart from the empirical research, more studies should be conducted in a relevant future time period, for example in 10 years, that will allow to see and obtain results from a deeper and constant impact on the music industry.ConclusionThe goal of this paper was to show how Spotify is a part of the sharing economy and how it has impacted the music industry. The problem addressed was to illustrate Spotify as a sharing economy platform and in which manner has this platform affected the music industry. Both, the goal and the problem, were addressed by first, explaining the context in which Spotify develops and its involvement with the sharing economy, followed by a discussion on how the platform contributes to the sharing economy and finishing with a hypothesis, limitations (for current research) and recommendation (for future research).


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