Spotify Strategic Acquisition Memo
Spotify, the Swedish streaming music giant, is exploring strategic acquisitions. The companys stock is up over 60% this year and the company is now valued at roughly $50 billion.
You are a consultant hired to help Spotify to evaluate possible companies to buy. Youve narrowed your research down to two companies:
Company A is a technology company that uses artificial intelligence and natural language processing to create highly accurate indexable and searchable text transcripts of audio and video content. Currently this company sells its services to large multinational media companies. This company has no other businesses or revenue streams.
Company B is one of the world’s first programmatic audio advertising exchanges. Its technology allows advertisers to buy media in audio content programmatically in real time while the user is listening. This company has no other businesses or revenue streams.
Spotifys CFO has asked you to do a quick business model analysis for one of Spotifys board members. Answer the following questions in a memo to the CFO:
Describe the business models of companies A & B and include descriptions of their key components (served market, organizing structure, revenue generation, and sustainability)
How would company A be useful to Spotify? Company B?
Which of these two business models (Co. A & Co. B) would be most attractive to the CFO? Why? Which model would be most attractive to the CMO? Why?
Is there a third type of business model not represented among these two options that might be a fit for Spotify to buy?
