Executive summary – Spotify’s:

Digital music services have disrupted the way music is distributed. This paper deals with
Spotify, the world’s largest growing music streaming service, by examining its international
expansion in particular. With over 100 million paid subscribers since its public launch in
2008, Spotify can be considered as the market leader. Within this report, it will be discussed
how the Swedish company was confronted with international challenges while expanding
throughout the world by giving an overview of Spotify’s international history. Moreover,
suggestions for further expansion will be given.
Spotify’s current international strategy, which displays strong forces for global integration,
still cannot be described as a pure type of global strategy. Various issues including cultural
barriers and different consumer habits, make it necessary for the company to consider
forces for local responsiveness correspondingly.
As a platform firm, Spotify’s international expansion is strongly influenced by cross-country
indirect network externalities. The company’s extensive global network represents a
substantial non-location-bound firm specific advantage (FSA) which, in turn, leads to
moderate liability of foreignness (LOF) when expanding abroad. Coupled with that, Spotify
mainly concentrates on following both, an aggregation and partly adaptation strategy. In
order to issue a purposeful suggestion for Spotify’s international expansion, the investigation
was based on a Country Portfolio Analysis (CPA), subsequently adjusted by the CAGE
Distance Framework.
South Korea with its stable and strong economy next to a large number of potential
subscribers was finally selected over China and Russia. Entering the country in form of a
greenfield investment, which can be described as a wholly owned subsidiary, turned out to
be the most suitable way based on previous conducted analyses. In this way, Spotify would
keep high control over its operations and brand image.
Considering the fact that Spotify acts in several international environments, forces for local
responsiveness seem to be necessary to some degree. Therefore, a slight adjustment of the
company’s international strategy will be recommended.