Pestle Analysis

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Pestle Analysis

Executive summary

Spotify achieved a major milestone in March 2011 having reached their 1 millionth paying customer and 6 million signed up for their free services firmly establishing them as one of the largest online music services in the world. The latest news has revealed a new partnership with virgin media whereby the Spotify services will be bundled with Virgin's 30Mbps broadband package and a separately a proposed partnership with facebook. In this report we will conduct a PESTLE analysis that will identify the main environmental forces that are affecting Spotify.

Pestle Analysis

1. PEST Analysis

Political and Legal

Presence of European Commission - It is an independent commission in Europe founded in 1950s to guard all European countries that executes its policies and laws. More importantly, it protects the interests of European nations as a single continent, and as a collective group, negotiate international agreements e.g. with World Trade Organization or even MNCs like Apple (European Union Institutions and Other Bodies, 2010).

Copyright Restriction - It is imposed by record companies to which country or region the product can be published or sold by the online music store, which simply means not every product produced, can be sold in any country (Phillips, 2008).

Digital Right Management - It is commonly known as DRM, a technology right given to the owner to control their intellectual property and to whom they would like to share. It is a way to control how creations like music, film, software or even books are used to avoid contents piracy. From business point of view, it could be an opportunity for any organization to earn revenue thru these rights - just like earning subscription fees from users who wish to download or access to a music or film library (BBC News, 2 April 2007). However, in late 2008, the top four global record producers had dropped DRM, and sell DRM-free songs through online music stores (Holahan, 2008).

Graduated Response Law - It is also known as Three Strikes, an intention or initiative of a few countries as a way to address the digital copyright issue in the context of peer to peer. If a user was found out have been sharing files (song) between each other through online, an email or warning letter will be sending out to the user, and then the Internet access will be terminated if there is no response after three warnings (The Economist, 14 Nov 2009). Recently, only France and UK in Europe and some other countries is Asia and Australasia has adapted this law.

Implication and Assessment

The price offered in online music store like iTunes is subjected to the regulation of EU. ITunes store needs to be careful in their-pricing strategies within the European market. For example, in 2008, iTunes received complaints of charging higher price to UK consumers whom uses pounds sterling compared to buyers in other European countries that buys in Euro (Phillips, 2008). Due to copyright restriction, iTunes only able to sell products within a restricted area dictated by ...
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