Service Niche Analysis: Spotify Case Study


In the modern world, business occupies all spheres of society, try to both earn a profit and provide people with the necessary products. Among the numerous areas of providing services and products, it is necessary to single out the service separately. Organizations based in the service niche are focused on providing citizens with a large number of products in a way that is easy to obtain. Such firms do not develop the product on their own, but are engaged in presenting it to the user. Using the example of a large international corporation Spotify, it is necessary to analyze how the service offer is implemented and what are the nuances of this market.

Organization Overview

First of all, it is necessary to characterize the organization that will be analyzed. Spotify is an online audio streaming service that allows you to legally and freely listen to music, audiobooks and podcasts without downloading them to device (Noam, 2021). Available as a website, applications for all operating systems, smartphones, smart devices and car media systems. However, the company offers a paid version called premium (Levin, 2019). Its essence is that the user is offered to ignore advertising for a fee, allows customer to listen to music without limits and use any functions of the service (Levin, 2019). It is worth highlighting that Spotify occupies a leading position in its niche not only within one country, but everywhere where the service is available (Levin, 2019). This is explained by the fact that the quality of the services provided is of high quality, simplicity and accessibility for the average client.

Target Market Segments

Thus, it should be emphasized once again that the niche occupied by Spotify is the streaming of music products from different artists. It is necessary to analyze in more detail what kind of service the organization offers to the user (Noam, 2021). An important advantage over Spotify’s competitors is that in addition to simply providing access to music, the service offers a wide range of opportunities (Kimball and Luisser, 2020). For example, every day Spotify makes personal recommendations for the user, analyzing his taste preferences. Another service offered by the company is permanent playlists, the essence of which is that they are randomly generated after each song (Kimball and Luisser, 2020). All these competitive advantages are a clear indicator of the quality of services that provide the user with the maximum amount of comfort, excluding inconvenience.

Separately, it is worth highlighting that the key market segment for Spotify is youth. Based on the analysis of the site, application and services, it can be concluded that the organization specializes in an active population that often listens to music and interacts with artificial intelligence (Noam, 2021). For example, the premium version has an offline music listening feature, which is most suitable for those who are on the move and may lose their Internet connection. Other evidence of a teen focus is the flashy design, the promotion of trendy and emerging artists, and the user interaction feature (Abreu et al., 2021). The last criterion is implemented in the form of certain rewards, compiling customers’ own playlists and summing up the results for the holiday (Sturman, 2019s. The key purpose of such features is to share these achievements among users, which becomes possible with the system of friends and subscriptions.

Current and Future Consequences

At the moment, Spotify has a large number of registered users, which is constantly growing. This is explained by the fact that the subscription to the service is cheaper than the nearest competitor, namely Apple Music. However, there is the possibility of a family subscription and a free unlimited period. This entails extremely positive consequences for the service, since it continues to occupy leadership positions in the niche and increase profits (Noam, 2021). However, it is worth highlighting several problems in the sphere that can negatively affect the service.

The first problem is that a lot of the content is for people over the age of 18. The legislation clearly regulates these rules, the violation of which leads to fines and sanctions against organizations. At the moment, in Spotify, such a restriction is bypassed by users without any problems, which is not possible in Apple Music (Johnson, 2019). Accordingly, the company needs to tighten the rules for registration and age verification through checks (Johnson, 2019). Otherwise, the firm may incur costs in the form of liability before the law.

The second problem is to identify discriminatory motives in the work of some performers. The fact is that society is actively fighting for the rights of minorities and is trying to destroy prejudices and causes for conflict. However, a number of performers use banned words, discriminatory jokes, and ambiguous phrases in their lyrics (Sturman, 2019). In the long run, this may repel the public from the Spotify service, as it will be interpreted as support for such statements. In order to prevent this from happening, management needs to censor the soft, infringing aspects (Bhattacharya and Bhattacharya, 2021). This can be done either like Apple Music, which divides each such song into two versions or by prevent such creativity from being streamed to a wide audience.

Finally, the third problem is the potential oversaturation of services, which makes it difficult to use such services. In an attempt to increase competitiveness, many applications try to implement as many features as possible, which leads to an overabundance of information in the service (Kompella, 2018). It must be remembered that the main task of the service sector is to simplify the receipt of products. Spotify needs to stop at existing services and develop them, but not introduce new ones (Kompella, 2018). For example, the service provides listening to podcasts, which is in demand among the population. However, the ability to listen to audiobooks is overkill, as it clutters the Spotify information field. This is already a different niche, an attempt to implement several areas at once may end in failure (Kompella, 2018). One of the negative consequences is that the management of Spotify will spend money on the content of the audiobook section, but this feature will not be popular.

Service Concept

The whole concept behind Spotify is that the free desktop version will attract more users. Many stay and eventually start paying to disable ads and access music from mobile devices. Between themselves, the developers call the free version a funnel that “pulls in” new customers and leads them further to the premium service (Gangopadhyaya, 2021). Analysts see how the flow of new users is distributed: people are not as interested in a computer as they are in mobile devices, where the application works for free only for the first 48 hours. Few users of the Spotify mobile app go further and pay for a subscription. Thus, the concept should be improved, the mobile application should be free not for 48 hours, but longer (Grant, 2021). The advantages of such innovations are especially noticeable in the summer, when the target audience of the service listens to music for a longer period of time.


The service sector is one of the most developed in the modern world, as evidenced by the organization of Spotify. The company most effectively implements strategies for attracting customers and providing a wide range of services. This leads to the fact that the company occupies a leadership position in the niche, and has bright and positive prospects. However, there are a number of current issues for the industry that Spotify’s management should pay special attention to. If they are ignored, the organization may experience significant losses and the loss of a number of users.

Reference List

Abreu, J., Abásolo, M. J., Almeida, P. and Silva, T. (Eds.). (2021) Applications and usability of interactive TV. New York: Springer International Publishing.

Bhattacharya, S. and Bhattacharya, L. (2021) Xaas: Everything-as-a-service – The Lean and Agile approach to business growth. Singapore: World Scientific Publishing Company.

Gangopadhyaya, M., Banerji, P. K., Nath, R., Poddar, S., Chakrabarti, S. and Datta, S. (Eds.). (2021) Interdisciplinary research in technology and management. Boca Raton: CRC Press.

Grant, R. M. (2021) Contemporary strategy analysis. New Jersey: Wiley.

Johnson, D. (2019) Transgenerational media Industries. Adults, children, and the reproduction of culture. Ann Arbor: University of Michigan Press.

Kimball, D. C. and Luisser, R. N. (2020) Entrepreneurship skills for new ventures. Oxfordshire: Taylor & Francis.

Kompella, K. (Ed.). (2018) Marketing wisdom. Singapore: Springer Singapore.

Levin, A. (2019) Influencer marketing for brands. New York: Apress.

Noam, E. M. (2021) The content, impact, and regulation of streaming video. The next generation of media emerges. Northampton: Edward Elgar Publishing.

Sturman, J. (Ed.). (2019) The SAGE international encyclopedia of music and culture. Newbury Park: SAGE Publications.

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