Spotify beefs up free tier to attract more paying customers
Global music sales grew 8.1 percent last year — the third straight annual increase — and streaming for the first time became the largest single revenue source.
Total sales spiked to $17.3 billion, with digital revenues accounting for 54 percent of the take, the International Federation of the Phonographic Industry said Tuesday.
Into the growing streaming sector, Spotify, the world’s largest music streamer, said it hopes to make more money by giving away more music.
The Swedish streamer said Tuesday the free, ad-supported version of its app will soon look and behave more like the paid, premium version.
Previously, nonpaying customers were unable to listen to specific songs on the mobile app — limited instead to shuffled playlists. Now, users will be given access to about 750 songs through 15 Spotify-curated playlists to listen to in any order.
The idea, according to Spotify Chief Product Officer Gustav Söderström, is to tempt more users into paying for better service. Sixty percent — or more than 40 million — of Spotify’s current premium subscribers started out on the free tier, he said.
“The better our free experience is, the more chances they’ll become premium users,” Söderström told reporters at an event at the Gramercy Theatre in Manhattan.
The company is also using machine learning to allow the app to more quickly discern users’ tastes, as well as to assist them in building their own playlists.
The move is Spotify’s latest to fend off increasing competition from rival Apple Music, which announced earlier this month that it had reached 40 million paying subscribers.
At Dec. 31, Spotify said it had 71 million paying subscribers and 90 million on its ad-supported tier.
Earlier this month, Spotify told investors it aims to have 96 million paying subscribers by the end of the year.
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