This final post will reflect on my experience with learning about how the digital world is influencing business practices. I will talk about some of the highlights of the actual content that we have learned about, as well as evaluating online learning itself as a means for education.
I think one of the most important overall themes that I picked up over the duration of this modules is that digital technology and innovation in modern times is changing how the world works very rapidly. There are all kinds of massive changes in how individuals and organisations do work that most people do not even realise. I think this links well with the topic in week 2 of the MOOC section of our module that explored how it is important for people in the modern world to be open to constant learning and training throughout their careers.
Digital technology is changing things so fast that the job one has when they leave university may not exist in 10 years’ time. New opportunities which require new skills will come about, so one must be ready to grasp these opportunities. After reflecting on this I myself have started learning Python (the coding language), it is an area of skill I am very unfamiliar with, but I know it will have great relevance to jobs of the future. After this I will ensure that I am always open to learning new skills and being open to identifying new job opportunities.
Not only job opportunities, but new methods of conducting business are emerging in the digital economy (such as the lightbulb rental business model at schipol Airport givenas an example in week 5 (Faithful, 2015)), so it is important to keep an open mind and be ready to abandon traditional methods in favour of more advantageous methods facilitated by the digital economy.
I thought the online learning of the module was a great refreshing way to learn a module at university. For me having variety in my learning is important, so it was good to have this module that was a completely different method of learning to my other modules that I am taking. That being said I don’t think that this is a method that would work for all modules; personally I do think being in a room with a teacher helps me grasp and remember information more easily, but as a one off module I think this one worked very well.
The interaction between peers through comments on each other’s blogposts and on the ELE content was an interesting and new dynamic which I have not experienced before in my learning. I think this is a great advantage of this learning method as it encourages conversation, debate, and critical thinking. Below is a short video in which I discuss some of the comments and contributions I made over the course of the module.
Started in Sweden in 2006, Spotify is an online music streaming service. Their mobile app first launched in 2008, providing users access to 50 million protected tracks. In the initial year’s customers could either pay for the app, or access a free account, but this free account was only available via invitation, as a means to control growth.
Since their inception Spotify has seen considerable and impressive growth, going from 18 million paid subscribers at the start of 2015, to 124 million at the end of 2019 (Spotify, 2019). They are also the worlds largest audio streaming platform with 36% of the market share, double that of Apple Music who are in 2nd with 18% (Watson, 2019).
The video above (8 minutes) gives a brief insight into Spotify’s current position, and potential future direction.
How Does Spotify Make Money?
Nowadays, Spotify offers a “freemium” business model in which users can use a limited version of the app for free (without invitation) which garners advert revenue. Alternatively, users can pay to access the premium version of the site. Premium accounts cost £9.99, or £4.99 for a student and £14.99 for a family account. In 2019 Spotify grossed €6.76 billion, 90% of which was from the premium accounts (Spotify, 2019).
However, despite its enormous revenues Spotify does not make a profit. In-fact they have made a loss every year they have been in operation:
(€Millions)
2019
2018
2017
Revenue
6,764
5,259
4,090
Gross Profit
1,722
1,353
849
Net Profit (Loss)
(186)
(78)
(1,235)
So where is all their gross profit going…
Developing Technology and Staying Ahead in a Competitive Landscape
Zhang, Kettinger, Kolte, & Sungjin (2018) explain several factors that mean an incumbent firm is at risk in a sharing economy, most of which apply to the online music streaming industry such as:
Value can be broken down into segments that are managed digitally
Many newcomers and high competition in the industry
In-exclusive or under used assets (Spotify does not have exclusive rights to songs (the asset here), so any number of firms can sell the same thing as them essentially
Intra-industry expansion of rivals (rivals that mainly deal in podcasts can easily expand into the music market, and vice versa
They then go on to suggest means by which an established firm can protect against such a vulnerable position in a competitive market, such as:
Strengthen your core competencies
Invest in new technologies
Partner with other firms
And Spotify is doing all these things; looking again at their financial reports we can see that they spend huge amounts on their income on research and development (€615m in 2019), as well as pushing their marketing model to try and ensure they snap up as much of the market as possible in this relatively early stage.
Cooperating with Relevant Partners
Spotify has also managed to strengthen its market position by partnering with the meditation app “headspace”.
The offer means that with either the student or regular premium accounts, the customer can connect their headspace account and unlock the premium version of that app too. Essentially giving users 2 premium apps for the price of one.
This is a good choice of partner app for 2 reasons; they do not compete with Spotify in their product offering but do target the same general customer base, and secondly it is a difficult offering to imitate, as headspace is the leading firm in the online meditation industry.
Reducing Piracy – Spotify’s PR
With the widespread introduction of the internet, the value of the music industry fell dramatically. People moved away from buying expensive physical CDs and records and towards downloading music online illegally. However, the process of illegally downloading music online is laborious (and illegal), and the emergence of platforms like Spotify gave people a relatively cheap way to access more music that they could ever imagine. The growth of music streaming services like Spotify have reduced piracy dramatically in recent years by offering a more convenient alternative (Aguiar & Waldfogel, 2015)
In the 90s £10 would maybe get you 10 songs in an album, when Spotify was introduced £10 gave you 50 million for the month.
Competition from Apple
Despite having double the market share and twice as many paid premium members as Apple, there is still a serious threat from a company which leads the worldwide smartphone market. Apples market leading position in the smartphone market gives them a unique ability to shut out foreign apps from full compatibility with many of their systems.
Apple is well known for being exclusionary with its products, for example not allowing other streaming apps to work with their “HomePod”, poorer compatibility with Siri, and slower app updates compared to Apple Music (Lovely, 2019). Naturally Apple want people to buy only their own product. Whilst Spotify is still going strong on android devices, Google owns the play store on android phones, and they are developing their own range of phones, smart speakers, music streaming services etc. There is always the threat that google will start to do the same as Apple have, leaving Spotify stranded as the less convenient option for end users.
References
Aguiar, L., & Waldfogel, J. (2015). Streaming Reaches Flood Stage: Does Spotify Stimulate or Depress Music Sales? Institute for Prospective Technological Studies.
Zhang, C., Kettinger, W., Kolte, P., & Sungjin, Y. (2018). Established Companies’ Strategic Responses to Sharing Economy Threats. MIS Quarterly Executive.
In an increasingly digitised society and economy, the growth of cyber-crime is inevitable. In the past a single individual was extremely limited in how much damage they could do, or how much money they could steal. However, the proliferation of the internet gives cyber-crime distinct advantages over traditional criminal avenues:
Cyber-crime is extremely scalable, one person has the potential to target hundreds if not thousands of people at once, and steal thousands if not millions of pounds with relative ease. Such was the case with South Korean web-hosting firm Nayana who paid attackers over $1 million .
Cyber-criminals can operate with relative security and anonymity compared to traditional criminals (Europol, 2017)
In terms of attacks on businesses in the UK there were 34 significant cyber-attacks, and 762 less serious cyber attack in the 14 months post October 2016 (NCA, 2018). Although these are not massive numbers, each cyber-attack could cost a company thousands, if not millions, of pounds and result in the breaching of potentially thousands of private records
Cybercrime targeted at individual victims caused the loss of over £190,000 every day in 2018.
Watch this slightly goofy video to find out how ransomeware, a common form of malware used to extort companies, works
“The scale and complexity of cyber-attacks is wide ranging. ‘Off the shelf’ tools mean that less technically proficient criminals are now able to commit cybercrime, and do so as awareness of the potential profits becomes more widespread.”
(NCA, 2018)
In the past police have been able to do little about the majority of cybercrime, especially that targeted towards individuals. Additionally the perception of cybercrime within the police was that it was fairly low priority, and held little interest to a regular officer (Button, Blackbourn, & Tunley, 2015).
So far, the response from the police has been to create specialist units that are trained for cybercrime, this is a new form of work that is appearing in the digital economy. Although there are not that many officers in this role currently, the need for them will only become greater as the prevalence and seriousness of cybercrime increases.
5G Will pose a significant challenge
Roll out of 5G networks will present security issues. 5G will mean there are many more internet of things (IoT) devices connected to the system; meaning many more ways for criminals to gain illegal access (Huber, 2019)
In this short interview, some of the security issues surrounding 5G networks are discussed
The stakes will be higher also, nearly everything will be connected to the 5G network, meaning a hacker would be able to cause vastly more disruption than they would be able to under current conditions. Think of the step up in possible disruption from traditional crime to cyber-crime, then apply that step again to how much damage can be caused by compromising a 5G system.
Looking to the future then how will the job of a regular police officer change?
Increase in the number of “Cyber-police”
There are three factors that will lead to an increase in “cyber-police” numbers:
The decrease in traditional crime modalities is being more than matched by the increase in in cybercrime (Loveday, 2017). This is due to the ease and reward available from cybercrime, and this effect will only get stronger as more and more of our society becomes reliant and connected to the internet
Decrease in number of regular officers needed to police a given amount of traditional crime due to improvements in technology used to assist police.
Increase in the seriousness of cybercrime. More money and more peoples personal private information will be at stake than ever before, moving cybercrime up the list of priorities for the police.
Retraining the Police Force
This means that normal police officers may need to retrain as “cyber-police” (which will constitute a radically different skill set) to help tackle this revolution in how criminals operate. They will need to have knowledge including programming, malware identification and analysis, as well as the ability to operate a wide range of hardware. But this raises several questions:
Will police officers be happy retraining for what is a greatly different role? What new skills will they need to learn? Will everyone be able to learn these skills?
Lifelong Learning
One of the distinguishing features of cybercrime from normal crime is that it evolves rapidly due to the potential reward for the criminal. This means criminals will be coming up with new methods constantly in order to get around the measures put in place by law enforcement. This is particularly true for state actors who will have the backing and resources of their respective governments, making them much more powerful.
This means that even when we have a fully trained, knowledgeable, and well equipped police force ready to deal with cybercrime there will need to be structures in place to facilitate constant learning throughout their careers, in order to adapt to the constantly evolving threat.
In Conclusion
it is evident that the nature of police work will change drastically in the future, and the police will have to ensure they are ready to adapt to the challenge.
What novel challenges can you identify that the police will need to address in a more digitised economy? Will a more digitised society provide the police with more opportunities or threats? How well do you think a regular police officer will be able to adapt to these changes?
Bibliography
Button, M., Blackbourn, D., & Tunley, M. (2015). The not so thin blue line after all? Investigative resources dedicated to fighting fraud /economic crime in the UK. Policing, 129-142.
Europol. (2017). Crime in the age of technology. Europol.
Loveday, B. (2017). Still plodding along? The police response to the changing profile of crime in England and Wales. Police Science and Management, 101-109.
NCA. (2018). The cyber threat to UK business. National Cyber Security Centre.
Hello, my name is Declan, I am originally from Essex which is just east of London. Currently I am studying a masters in international business at the University of Exeter. This blog will document what I learn and discover on the “digital business models” module; hopefully I will gain a comprehensive understanding of how businesses are adapting to an increasingly digitised world
This is an example post, originally published as part of Blogging University. Enroll in one of our ten programs, and start your blog right.
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Declan's Digital Business Blog 