Gadgets

Spotify plays the long game with Family and Student Plans even as revenue per user drops

Spotify's "family plan", a variant of which was launched in 2014 as well as his "student plan" appear to be at the origin of an important part of the growth and the retention of the company. underlines it several times in his filing for a direct listing on the public markets today .

But this also means decreasing the amount of revenue that every premium subscriber actually gets. In the repository, Spotify indicates that the cost of a family plan – which costs $ 14.99 per month – can be discounted out of a total of six accounts (though not always six). The premium user consists of the unique premium account, which pays for the subscription, and five sub-accounts for family members. Spotify also points to his student plan, which costs $ 4.99 a month, as another factor contributing to these pressures. This means that even if Spotify brings together more premium users, the actual revenue generated by these users may decrease over time.

And, indeed, that's what happens, depending on the filing. Spotify said its average business per user figure was about € 5.24 in 2017, compared with € 6.00 in 2016 and € 7.06 in 2015. Spotify recognizes in the ranking ("Family Plan "is mentioned almost three times) that this is partly due to the family plan. But at the same time, the churn – an important measure for subscription services that shows the number of users coming and going – is decreasing every year and the number of hours spent on it. listening increases dramatically. The churn rate was 7.5% in 2015 and 5.1% in 2017; Content hours more than doubled during this period, from 5.4 billion hours to 11.4 billion hours.

Here is the master key of the depot:

The net growth rate of Premium subscribers is also affected by our ability to retain our existing premium subscribers and the combination of subscription pricing plans. We have increased loyalty over time because new features and features have increased engagement and user satisfaction. From a product point of view, the launches of our Family plan and our student plan have decreased the ARPU Premium (as described below) because of the lower prices per Premium subscriber for these premium rate plans, each of these plans helped improve retention the Premium service. Thus, while the ARPU Premium has decreased by 9% from 2015 to 2016 and 14% from 2016 to 2017, thanks in part to the launch of the Family Plan in 2016, Premium Churn has decreased by 1.1% of 7 , 7% in 2015 to 6.6% in 2016 and decreased by 1.1% more, from 6.6% in 2016 to 5.5% in 2017. With the growth of superior retention products, such as our family plan and our student plan, we believe these trends will continue in the future.

All of this is more or less part of a long game for Spotify, which seeks to become public in the United States in the context of significant and growing competition for premium corporate subscribers like Apple or Google. Both companies also own the App Store platform and could therefore be the makers of operating economics on mobile devices, which means that Spotify needs to appeal to as many users as possible – even if it means less money per user. Spotify has recognized in its public repository, too, that Apple and Google represent a significant risk in this sense .

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