The Business Model Canvas (BMC) can be defined as a tool that is used in the generation of a business model. “The BMC is made up of nine building blocks forming a chart that describes a firms value proposition, infrastructure, customers, finances, resources, channels, revenue streams and cost structure”(Shaw 2011).
We will write a custom Essay on The Business Model Canvas specifically for you
301 certified writers online
I am going to describe the business of Spotify.com using the BMC. Spotify is a company that helps its customers get the best music collection for their phones and personal computers. It is a company with a large dataset of music tracks. It also enables its customers to browse music from their friend’s collection lists and from music celebrities (Pigneru, 2012).
This refers to the partners that we do business with. They include ,Marantz, Phillips, Onkyo, Sonos, Samsung, Denon, WD, Boxee, Morpher and logitech
This involves the main mission as to the existence of the company. Theses are the activities that give a company the meaning for its existence. The key activities for spotify are divided into three;
- Production – This involves producing the music and distributing it to the customers and loading it up to their website.
- Problem solving – Solving problems faced by customers by making use of qualified IT team. Making sure there is enough music in the system
- Platform management
This involves value delivered to customers.
This is the association between the company and its clients.
This covers areas where customers are found in the market.
This refers to the resources that make up our value proposition and which will generate revenue and at the same time reduce costs. The resources aim at improving customer relationships and in the distribution of products.
This are the channels of distribution used to get to our customers. It involves using the channels that enable us reach our customers best and in the shortest time. The channel aims at;
- Awareness – Creating awareness to customers about our products.
- Evaluation – By allowing our customers to evaluate us by having questionnaires that give feedback on our products and services. And having a balance score card for our employees.
- Purchase – These refers to the ease with which our customers can pay for our products which can be done through bankers cheque, credit cards, internet money transfer, money orders or in cash.
- After sales service – Refers the support given to the customers after the purchase. This includes free delivery to their locations, installation, offering warranties and guaranties and doing regular check-ups (Spinellli, 2012).
This touches on the cost structure of our business and creating value for money.
This refers to the income generated from the business. It involves ethical business practices by charging customers fairly. The customers can pay for this revenue streams through negotiated bargaining or buying in the real market prices.
Business model pattern
The business model of Spotify has a long tail business model patterns.
Long tail business
This is a business model that focuses on selling a few products to a large number of clients. This is because the business is targeting a market that is not very profitable in terms of sales and targeting a specific market can be too costly (Pignerur, 2012). This business mode is working for Spotify because;
- There is democratisation in the production of music in the industry. There is advanced technology that favours the company, and the technology was more costly years back. There are also cheap applications that enables customers download music and videos.
- There is democratisation in the distribution process. This has been made possible through the internet where the distribution costs are low, the inventory is always available in the internet, there is little communication and transaction overheads and the internet has opened up the niche market
- There is less costs of searching for the products in the market. This because Internet Service Providers (ISP) have lowered their costs. Therefore, it is easy for the niche market to get their products cheaply.
- The cost of running the business is low and the company can have unlimited number of clients from the mass market. The company can as well subsidize its costs for its loyal customers (svathy, 2012).
Business Model Canvas Designed for: Spotify.com Designed by:
Get your first paper with 15% OFF
|Key Partners |
Marantz, Phillips, Onkyo, Sonos, Samsung, Denon, WD, Boxee, Morpher and logitech
|Key Activities |
|Value Propositions |
Newness, affordability, design, reducing product costs, reducing product risk, product branding, developing superstars, artists, hits and quality products
|Customer Relationship |
Personalized assistance to customers, customer service, self-service, automated services and co-creation
|Customer Segments |
Particular market segment
Developing market platform
Radio and T.V
|Key Resources |
Intellectual property rights like brand, goodwill, data and patents
|Cost Structure |
Extensive automation, outsourcing, overhead reduction, economies of large scale production, variable costs reduction, marketing and talent production.
|Revenue Streams |
Sale of music, leasing, sale of assets, consultancy, subscription fees and usage fees
List of References
Pignerur, A 2012, Business model Generation. A Handbook for visinories, Game changers, and challegers. John Wiley & Sons, New York
Pigneru, A 2012, anaging creativity and innovation. New york: John Wiley & Sons.
Shaw, J 2011, Business Model Canvas. Web.
Spinellli, J, 2012, New venture creation -Entrepreneurship for the 21th century. Mc Graw Hill, New York.
Svathy, S 2012, Business Model Canvas. Viewed on https://papers.ssrn.com/sol3/papers.cfm?abstract_id=909038