Spotify beefs up free tier to attract more paying customers
Spotify is hoping to make more money by giving away more music.
The Swedish streaming company said Tuesday the free, ad-supported version of its app will soon look and behave more like the paid, premium version.
Previously, non-paying 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 that they will be able to listen to in any order.
The idea, according to Spotify’s 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 as users 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 learn 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. Most recently, Spotify said it had 71 million paying subscribers and 90 million on its ad-supported tier as of December.
Earlier this month, Spotify told investors it aims to have 96 million paying subscribers by the end of the year.
Separately Tuesday, a trade group revealed that streaming services have become the music industry’s single biggest revenue source, overtaking physical sales and digital downloads for the first time.
The IFPI Global Music Report for 2018 said global recorded music revenues rose 8.1 percent over the past year, driving streaming revenue to 41.1 percent of the overall pie.
Shares of Spotify, which debuted on the New York Stock Exchange April 3, closed the day down 1.9 percent, at $155.07.