With its 551 million users and 220 million premium subscribers across 184 regions, Spotify is currently at the top of the list as the world’s no. 1 audio streaming service. It has changed the way people listen to music since 2008, the year it was first launched. From the beginning, its marketing strategy has been spot-on, as it has managed to grab the user’s attention with its convenience, free usage, and accessibility. It became an alternative to piracy as it allowed the users to listen to any song they wanted without going through any illegal website and that too for free.
As of July 2023, Europe accounted for 40% of Spotify paying subscribers. Similarly, North America,Latin America, and the rest of the world accounted for 40%, 29%,
and 20%, respectively. India falls under the “rest of the world” indicating that the number of paid subscribers is lower in comparison to other countries when it comes to paying money for a service that is either free or can be used via an ad-supported model.
Thus, it is no surprise that, according to official data.
● Spotify has 551 million monthly active users as of Q1 (Quarterly Performance) 2023. The
total MAUs (Monthly Active Users) grew by 27% Y/Y.
● By the end of the second quarter of 2023, it was anticipated that the platform would have 572 million MAUs, according to insights released in the shareholder letter of Q2 2023.
But recently, Spotify made some updates that restricted some features for Indian users specifically. It was mainly aimed at free users in India to encourage them to opt for paid subscriptions. It wasn’t the first time Spotify had used this strategy, as most of these restrictions align with the ones in Brazil. The Changes restricted the users from performing some of the essential functions, which includeds huffling, repeating, and the ability to move forward or backward within that particular song.
These sudden updates to the feature have caused an uproar among avid free users in India. It received backlash from the users as they took to various social media platforms, showing their frustration through labels such as “humiliating” and "greedy." However, if we look at the bigger picture, this action has proved to be a good marketing strategy for the increase in revenue in the market. With its target being 572 million MAUs as of Q1 2023, it managed to reach a total of 574 million users as per
Spotify’s Q3 results. According to the results, the platform reported an increase of 26% in MAUs,which surpassed their goal by an impressive 2 million users. Additionally, there was a 16% increase in subscribers per year, reaching 226 million. The business's overall revenue increased by 11% annually to a hefty 3.4 billion euros.
According to a news report published by Times of India, Spotify told TechCrunch, “However, it does not fall under top markets in terms of subscribers to free users ratio — given the majority of users In India opt for the ad-supported model,” when asked about India’s position among the MAUs. The experience for free users in India is now close to what users in other countries experience, and these changes come as the market has matured, according to Spotify. This statement clearly stated Spotify’s We have talked about one of the main things that attracted users to Spotify, i.e., its freedom.
Restricting them may adversely affect its attractiveness as users may shift to other music apps with everyone not willing to buy paid subscriptions.
As a free user myself, I was very patient at first, but when it started restricting me from most of the basic functions, it made me want to shift to a different application like JioSaavn as an alternative. This might only be the case for some, as eventually, it did increase the revenue in the market. However, if these restrictions become overbearing in the future, it might cause distress between Spotify and its users, making their relationship sour.
But if this proves to be an effective marketing strategy, it might see a significant rise in subscription revenue, which in turn might change India’s position in the paid penetration market. Well, it is too early to detect the outcome of this strategy, so let us keep analyzing how it will unfold in the future.
Udeeta Pegu
3rd semester
Maybe its spotify approach to increase its loyal customers rather than focusing on its mass consumption. Revenue will generate more but also a stable service users will keep spotify intact in the upcoming recession by inflation.
ReplyDeleteKeep writing such blogs, Udeeta.
Thank you.