1) What are the reasons consumers of music switched to digital?
Streaming services pointed to the ability to discover new music, their free of charge tier of offerings and the ability to listen to music without needing to purchase individual songs. Majority of consumers who use pirate sites i.e. approximately 57% believe that there are good services available for legally accessing digital music. The significant factors which drive the popularity of downloads and streaming services. The first factor being Security and ‘ease of payment, the second being the guarantee that the service is legal and the third factor being the trust that the consumer has in the brand or company.

2) Can Spotify be profitable in the future?
Yes, Spotify can be profitable in the future if * They pay less in royalties or perhaps pay less in record company advances * Watch the pennies very closely: If Spotify was dedicated or forced to pay its current royalty and distribution costs at the same level, then it is probably going to have to cut its spending elsewhere to become profitable. * Finally make free pay: Rather than cutting financial corners, it is most likely that Spotify will want to become a profitable company the hard way by raising its average revenue per user in future to the point that its large costs can’t hurt its bottom line.

3) Apple’s iTunes is the leading distribution of a copy of digital music which Spotify and Rhapsody are leaders in the streaming realm. Which distribution model, digital download or streaming, will come out on top? You can include the current debates about the pricing models as discussed in the two articles about the recent meeting in Nashville.

4) Why is Spotify not profitable? What could Spotify do to become more profitable?
Spotify is not Profitable because it pay more royalties and in record company advances and also by providing free streaming or subscription which is ad free for lesser costs instead of optimizing the costs.
Spotify can become more profitable if they “pay less in royalties” or “pay less in record company advances” or “by cutting their spending elsewhere other than these royalties and record company advances” or “by raising the subscription fees i.e. average revenue per user to certain level which is optimal value for both user and company”.