Introduction
Music streaming is a popular service with a global reach and an appeal to almost any customer segment. Technology enables both small and large firms to enter the market and affects the pricing strategies of their competitors. However, Spotify remains on top of the industry due to its availability, quality, and amount of stored content (Sunkel, 2022). Such success does not imply that this business is unaffected by shifting customer demands. It is possible for listeners to find a substitute option with ease, making it challenging for Spotify to keep its spot without continuously making adjustments to its app. In this post, the elasticity of music streaming services, such as Spotify and Amazon Music, will be discussed.
Discussion
First of all, the market for music applications has a significant number of major companies that provide high-quality options. In this case, demand is elastic, as the quantity of the available apps does not shift the price below a certain point (Greenlaw et al., 2017). This industry feature allows firms to differentiate themselves through slightly differing offers and find their unique client bases. While Spotify remains the top music service, Amazon Music and Apple Music were able to raise their prices due to the high demand for these apps (Sunkel, 2022). It is critical to consider the impact of this move to avoid losing clients due to their perceived value of subscriptions.
Moreover, customer trends affect this industry through both shifting music and technology preferences. Elasticity follows these directions, enabling services to adjust their prices in accordance with their alignment with the majority of their customer bases. In such a case, the change in demanded quantity will follow the predicted path of elastic demand. A similar situation will happen if a firm, even Spotify, decides to increase its subscription fee, as the loss of a percentage of its client base will lead to decreased profitability. For this reason, Spotify did not change its price for over ten years, while other services that strive to take its place continue to search for a competitive advantage through pricing strategies versus demanded features (Sunkel, 2022). Elasticity continues to drive the market even among high-end businesses due to fluctuating customer trends and new features that affect this parameter. If Spotify ever loses its grip on its clients, there are numerous substitute options that will rapidly draw these people to its platforms. Such an outcome would force even top streaming services to revise their pricing approaches drastically.
Furthermore, this way of listening to favorite music is a luxury, which implies that the global economic situation can affect the pricing strategies of streaming services. Adjustments are essential for the listed platforms, as they allow businesses to accommodate shifting demands with greater efficiency. The quantity demanded may drop significantly due to outside factors, causing Spotify to lose its customers if it ever changes its subscription fees.
Conclusion
In conclusion, elasticity has a significant impact on Spotify and other music streaming platforms, as there are numerous factors affecting people’s demand for this service. The industry is heavily dependent on competition, customer trends, and economic factors. Spotify has the advantage that allows it to keep its prices, while other businesses in this market have to adjust their prices according to the demand for their services. The availability of substitutes is the primary force driving elasticity in the music streaming market, while people’s music tastes and the value of such a mode of listening continuously force firms to make necessary changes.
References
Greenlaw, S. A., Shapiro, D., & Taylor, T. (2017). Principles of microeconomics (2nd ed.). OpenStax.
Sunkel, C. (2022). Spotify considers first U.S. price increase for individual premium plans in 2023. EDM.com. Web.