How the Streaming Model is Changing: A Look at Spotify
By Zil Distribution
Streaming growth was driven by low prices, access to all music, and the same experience for all users. In the US, growth slowed from 29% to less than 6%.
Key Changes
Price Increases
Prices ($9.99 for 12 years) started increasing, with more hikes expected. The goal is for users to get used to this new reality.
Converting Free Users
A premium user is worth 13x more than a free one. Access to lyrics for free users was restricted. Free trials will likely be shortened to no more than three months.
New Tiers
New tiers aim to segment fans: free, music-only, audiobooks-only, music + audiobooks, and Music Pro add-on. Direct artist subscriptions are also expected.
Two-Sided Marketplace
Spotify focuses on monetizing listener attention, selling it to artists using tools like Marquee and Showcase.
Discovery Mode Trade-offs
Reducing royalties in exchange for greater exposure, and reclassifying premium tiers as "bundles."
Conclusion
After years of rapid subscriber growth, it's time to be profitable. These changes redefine how music is consumed and monetized.