Case: A Luta da Spotify pela Sobrevivência – Estratégia, Concorrência e Defensabilidade

Este case em inglês foi desenvolvido para executivos e alunos avançados que desejam aplicar vocabulário técnico de negócios, estratégia e inovação em um cenário realista e desafiador.

Você será colocado no papel de CEO da Spotify em 2013, quando a empresa ainda não era lucrativa e enfrentava uma séria séria: o poder esmagador da Apple em mercados desenvolvidos.

Ao longo da leitura, você aprenderá sobre defensabilidade estratégica, explorando cinco alavancas principais: tecnologia, efeitos de rede, marca, execução/distribuição e custos de troca.

O objetivo não é apenas melhorar seu inglês, mas treinar a sua tomada de decisão estratégica com base em evidência e estrutura analítica sólida.

Case

This case will take about 30 minutes to complete. It is designed to put you in the CEO’s chair at Spotify in 2013, facing the threats of Apple.

As you go through the story, you will be asked to make strategic choices and see their consequences. The goal is to help you practice how to build defensibility in highly competitive markets.

Learning Objectives

Understand the concept of defensibility and why it matters in competitive strategy. Recognize five sources of defensibility: technology, network effects, brand, execution/distribution, and switching costs. Derive practical lessons for building defensibility in your own organization.

Spotify: The Fight for Survival

By 2013, Spotify was no longer just a small Swedish startup. Founded in 2006 by Daniel Ek, the music streaming service had expanded rapidly across Europe and was now gaining traction in the United States. Its “freemium” model attracted millions of users who could listen to music for free with ads, while a growing share paid for the premium version without interruptions.

The business logic seemed solid: unlike iTunes, which sold individual tracks, Spotify provided access to the entire music library for a fixed monthly fee. Still, the future was uncertain. The company had yet to turn a profit, licensing costs with record labels were extremely high, and investors were pressuring for signs of sustainability.

At that moment, a looming threats began to haunt the leadership team.

The Sleeping Giant: Apple

The threat came from Cupertino. With iTunes, Apple already owned the strongest relationship between consumers and digital music in the world. Rumors of an upcoming launch of Apple Music made the atmosphere more tense.

Apple did not need to acquire users from scratch. It already had hundreds of millions of iPhones that could be leveraged through native integration. The simple fact of having a streaming app pre-installed could dramatically reduce customer acquisition costs and squeeze the competitive space.

The Strategy Meeting

On a rainy October morning in Stockholm, Daniel Ek gathered his team. :

Ek knew that execution speed alone would not be enough.

The central question was: what could Spotify do to ensure its long-term survival and leadership in the global market?

Ek stared silently at the numbers projected on the screen.

At this point, the leadership team reviewed the company’s performance data and competitive benchmarks.

The following tables summarize Spotify, and Apple on users, revenues, and royalties.

Users (mi)

Year	Spotify	Apple
2010	10	120
2011	15	160
2012	24	200
2013	36	240

Revenue (US$ mi)

Year	Spotify	Apple
2010	100	6000
2011	180	7200
2012	310	8000
2013	500	9500

Royalties (% revenue)

Year	Spotify	Apple
2010	90	50
2011	90	50
2012	90	50
2013	90	50

There was little room for mistakes.

As the meeting ended, Ek took a deep breath. A decision had to be made: what should Spotify do to secure its future in the face Apple?

What strategies should Spotify adapt to protect its market?

Theoretical Background

A recent article in Insignia Business Review emphasized that “defensibility is everything” and that investors are increasingly asking, above all else

How defensible is your business?

James Currier, a venture capitalist at NFX, also argued that

If I have a choice, I’d rather start a business where I know if it works, it will be defensible…

Elad Gil (2018) added nuance by observing that

Most early stage startups are not very defensible.

Although the term defensibility is popular in venture capital and entrepreneurship, strategy research frames it through concepts such as isolating mechanisms (Rumelt, 1984), sustained competitive advantage (Barney, 1991), and appropriability regimes (Teece, 1986). In this sense, defensibility reflects the firm’s ability to preserve rents by protecting its resources against erosion.

Technology-based barriers

Technological assets, such as proprietary algorithms, patents, or exclusive data, represent classical sources of defensibility. Teece (1986) argued that innovation alone does not guarantee advantage; firms must also control complementary assets that allow them to appropriate returns. In the digital economy, proprietary data is increasingly seen as a defensible asset (Farboodi et al., 2019), since scale effects in data accumulation enhance predictive algorithms.

Network effects

Katz and Shapiro (1985) demonstrated that network externalities generate self-reinforcing dynamics: the value of a product increases with the number of users. In digital platforms, this effect is amplified as multi-sided networks grow (Parker, Van Alstyne, & Choudary, 2016). For music streaming, playlists, communities, and sharing functions are examples of mechanisms that create switching costs through network effects.

Brand and reputation

Defensibility may also stem from brand strength. Keller (1993) conceptualized brand equity as the differential effect of brand knowledge on consumer response. A strong brand can act as a cognitive shortcut, reducing customer search and making competition less relevant. Empirical studies confirm that brand equity enhances both customer loyalty and financial performance (Aaker, 1996).

Execution and distribution

The ability to execute at scale and secure privileged distribution channels represents another layer of defensibility. Porter (1996) framed this as “fit” in activity systems: when a firm’s choices reinforce each other, rivals cannot easily imitate without significant trade-offs. In platform markets, distribution advantages such as default pre-installation or exclusive partnerships can decisively shift market outcomes (Eisenmann, Parker, & Van Alstyne, 2006).

Switching costs

Klemperer (1995) defined switching costs as the costs consumers incur when changing suppliers, ranging from tangible expenses to psychological or relational barriers. In digital ecosystems, accumulated playlists, progress history, or achievements can lock users in, thereby increasing customer lifetime value.

Taken together, these perspectives illustrate that defensibility is multi-dimensional. Firms rarely rely on a single barrier; rather, they build layers of defense that combine technology, network effects, brand, execution, and switching costs to secure long-term survival.

References

Aaker, D. A. (1996). Building strong brands. New York: Free Press.

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108

Currier, J. (2016, September 15). Defensibility creates the most value for founders. TechCrunch. https://techcrunch.com/2016/09/15/defensibility-creates-the-most-value-for-founders/

Eisenmann, T., Parker, G., & Van Alstyne, M. (2006). Strategies for two-sided markets. Harvard Business Review, 84(10), 92–101.

Farboodi, M., Mihet, R., Philippon, T., & Veldkamp, L. (2019). Big data and firm dynamics. AER: Insights, 1(2), 1–19. https://doi.org/10.1257/aeri.20180491

Katz, M. L., & Shapiro, C. (1985). Network externalities, competition, and compatibility. The American Economic Review, 75(3), 424–440.

Keller, K. L. (1993). Conceptualizing, measuring, and managing customer-based brand equity. Journal of Marketing, 57(1), 1–22. https://doi.org/10.1177/002224299305700101

Klemperer, P. (1995). Competition when consumers have switching costs: An overview with applications to industrial organization, macroeconomics, and international trade. Review of

Economic Studies, 62(4), 515–539. https://doi.org/10.2307/2298075

Parker, G., Van Alstyne, M., & Choudary, S. (2016). Platform revolution: How networked markets are transforming the economy and how to make them work for you. New York: W.W. Norton & Company.

Elad Gil. (2018, August 6). Defensibility and competition. Elad Blog. https://blog.eladgil.com/p/defensibility-and-competition

Insignia Business Review. (2025, April 15). Moats in the age of AI: Defensibility is everything. Insignia Ventures Partners. https://review.insignia.vc/2025/04/15/moats-ai/

Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.

Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61–78.

Teece, D. J. (1986). Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy, 15(6), 285–305. https://doi.org/10.1016/0048-7333(86)90027-2

Cultural Representation

Almost a decade later, Spotify’s early struggles became the subject of The Playlist (Netflix, 2022). The dramatized series portrayed Spotify’s founding years as a David versus Goliath story against the global music industry. Students may watch the trailer (The Playlist – Official Trailer, Netflix, 2022).

The series highlights entrepreneurial storytelling, which contrasts with the strategic dilemma of defensibility faced by Daniel Ek and his team in 2013.

Managerial Takeaways

Defensibility is not one thing but a layered system of technology, network effects, brand, execution, and switching costs.

Storytelling and vision attract attention, but long-term survival requires hard structural barriers.

Every business should ask: "If a giant entered my market tomorrow, what would protect me?"