Spotify's Fewer U.S. Premium Members and Higher Churn Rate Attributable to Competition From Apple Music and Others

Discussion in 'iOS Blog Discussion' started by MacRumors, Jul 23, 2018.

  1. MacRumors macrumors bot

    MacRumors

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    Consumer Intelligence Research Partners this afternoon shared analysis comparing data collected from Spotify subscribers in the United States and Spotify subscribers globally, finding some notable differences in habits between the two.

    Spotify has a lower percentage of Spotify Premium subscribers in the United States compared to the global share, according to CIRP, which CIRP attributes to the competitive U.S. market that offers many different services from Apple, Google, Amazon, and others.

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    In the United States, 35 percent of Spotify users have signed up for a premium subscription, while the other 65 percent listen to the company's free tier or were previously Spotify Premium subscribers.

    Of premium subscribers in the U.S., 55 percent have individual accounts, 24 percent use a family plan, 12 percent have student subscriptions, and 9 percent have a subscription that combines access to Spotify Premium and Hulu.

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    During the second quarter of 2018, which is when the data was collected, 11 percent of ad-supported Spotify listeners started a trial Premium subscription, while 74 percent of subscribers continued with a paid Premium subscription when a trial ended.

    16 percent of Premium subscribers ended a subscription and reverted to the free listening tier or stopped using Spotify all together, a churn rate that CIRP says is higher than Spotify's global churn rate.
    While Spotify and Apple Music both operate in multiple countries around the world, Apple Music has been gaining popularity rapidly in the United States since its 2015 launch.

    In early July, an anonymous source from a major U.S.-based distributor told Digital Music News that Apple Music has surpassed Spotify's subscriber count in the United States, something The Wall Street Journal accurately predicted would happen this summer given the subscriber growth rates of the two companies.

    Both Apple Music and Spotify are said to have more than 20 million subscribers in the United States, with Apple "a hair ahead" of Spotify. Spotify and Apple Music do not break down their subscriber counts by country, so there's no official confirmation.

    Spotify in May announced that it has a total of 75 million paid subscribers worldwide, and Apple during the same month said that it has 50 million paid subscribers and free trial users around the globe. Spotify's total user base continues to be much larger -- 170 million active users - due to the free ad-supported tier that Spotify offers.

    Customers in the United States have a lot of choice when it comes to streaming music services. Along with Apple Music and Spotify, Pandora Radio, SoundCloud, Google Play Music, Amazon Music and others offer subscription options.

    CIRP's Spotify data for its report was gathered from surveys of 500 U.S. participants who used Spotify from April to June 2018.

    Article Link: Spotify's Fewer U.S. Premium Members and Higher Churn Rate Attributable to Competition From Apple Music and Others
     
  2. farewelwilliams macrumors 68020

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    #2
    just wait until Apple dumps the macOS iTunes app. numbers are going to change even more.
     
  3. Mapex macrumors member

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    #3
    Spotify used to average 22-25% of all users were Premium; it seems at 35% in the US that Spotify Premium is actually GROWING.
     
  4. acorntoy macrumors 65816

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    #4
    But at what cost? The only reason I use Spotify is because the offer the $4.99 deal that bundles Spotify and Hulu. Without that it would be Apple Music, the premium seems to be growing but they probably aren’t getting as much as others as they have to offer bonuses to get users.
     
  5. redmac macrumors regular

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    #5
    The percentage of premium users has always been higher in US. People with higher income can spend more on non-essential goods and services.
     
  6. haruhiko, Jul 23, 2018
    Last edited: Jul 23, 2018

    haruhiko macrumors 601

    haruhiko

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    #6
    Spotify's app is much better than Apple Music.
    It also has much better music suggestions and localised content.
     
  7. BlargKing macrumors 6502

    BlargKing

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    #7
    For me its mainly that I'd only heard of Spotify, tried it, liked it, and have stuck with it. If it ever goes under I'll probably switch to Google's offering.
     
  8. JosephAW macrumors 68020

    JosephAW

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    #8
    It will be a sad day when Apple puts Spotify out of business by their heavy handed tactics.
     
  9. jbachandouris macrumors 601

    jbachandouris

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    #9
    I am on a trial (3 month for 99 cents each) and I am not going to continue after the trial. Spotify always seems to add music to soundtracks based on what they think I want to hear. They have guessed wrong. I don't have any interest in having rap music with profanity added to my Ant Wan and The Wasp Soundtrack. I understand this on the free tier, but if I am paying, I DON'T want any songs other than what is on the album.
     
  10. DeltaHF macrumors member

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    #10
    I really hope Spotify can stay competitive with Apple in the long run.

    I just re-started a trial of Apple Music... I think it was even worse than when I first tried it out at launch.

    Spotify all the way, and that's coming from an :apple: fanboy like myself.
     
  11. Scottsoapbox macrumors 6502a

    Scottsoapbox

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    #11
    Customer turnover related to competition! Shocking truism. :rolleyes:
     
  12. RudySnow macrumors 6502

    RudySnow

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    #12
    Is anyone really surprised here? Apple pre-installs AM on every single device they sell, so naturally they will jump to the lead fairly quickly. I actually expect the number to grow when/if Apple joins their content services (specifically Texture offerings), although I know how much MacRumors readers will hate that idea. And, for ME, I am one of the ones who prefers AM over Spotify as I can integrate all of my stored music without worrying about porting them to Spotify and not finding suitable matches.

    Flame me. I can take it! :)
     
  13. Michael Scrip macrumors 603

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    #13
    I dunno. Spotify might put themselves out of business by their own terrible business tactics.

    Think about it. They got the first-mover advantage and they amassed tons of users. Seems great, right?

    But as Spotify adds more users... they actually lose more money. So every new customer costs them money.

    Oh I hear what you're saying. Apple is the first credible threat to Spotify.

    But Spotify has been losing money long before Apple got onto the scene.
     
  14. Lozza013 macrumors regular

    Lozza013

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    #14
    As much as I enjoy Apple Products and Apple Pay, I tried Apple Music and it didn't work for me. It's Spotify all the way for me.
     
  15. thisisnotmyname macrumors 68000

    thisisnotmyname

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    #15
    You have to admit that anti-profanity rap fan is kind of a niche though, not sure the AI would intuit that.

    "Will Smith doesn't have to cuss to sell record well I do so ..." :)
     
  16. ArneK macrumors regular

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    #16
    Why don’t you just turn that feature off if it annoys you so much? Spotify’s settings are pretty straight forward
     
  17. itsmilo macrumors 68020

    itsmilo

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    #17
    You must be using it wrong
     
  18. Abazigal macrumors G4

    Abazigal

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    #18
    Blame Spotify for not having a sustainable business model to begin with if that ever happens.
     
  19. dan ros macrumors newbie

    dan ros

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    #19
    If 97.2% of Artists are not being paid, or not being paid fairly, then how is Spotify "healthy" for anyone but Spotify? Either Spotify fails, or the Music industry fails. Y'all support Spotify....why?
     
  20. PeLaNo macrumors regular

    PeLaNo

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    #20
    That’s what happened when you offered free tier and have core features of your service.

    In most users perspective it’s like : Why do I have to pay ? All I want to do is listening to music and I can do that without paying to Spotify.
     
  21. tkermit macrumors 68040

    tkermit

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  22. threesixty360 macrumors 6502

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    #22
    Spotify isn’t really about profitability for the company itself. Major labels have always had a stake in Spotify and it is used by the major labels to make lots of money and hedge against Apple doing what they did to the industry with iTunes.

    So Spotify will always be fine. Regardless of if it is running at a loss or not. Because of the content payment situation there is pretty much no way to make money the way Spotify do with a product so heavily slanted towards freemium.

    The long term plan will be to get rid of freemium anyway as Apple have proved it can be done.

    Finally, this proves that quality over quantity is where it’s at in terms of market share. Apple has maybe 20% of phone sales but pretty much eclipses the 80% of android etc... because Apple consumers trust the platform and are more motivated to pay. There are songs and films people have bought 15 years ago on Apple and are still available to them. It’s hard to say any platform out there is as trustworthy as Apple in regard to content. The Apple demographic also has the most money to spare which is seen in the fact that they are willing to spend on devices that in some cases are twice as expensive as the alternative (iPhone X vs plus one).

    As phone sales start to reduce and things like GDPR become more prevalent, actual services will be where companies grow. Who is going to best Apple here? Samsung ? Microsoft? Even google is going to struggle getting money out of android customers. It’s going to be an interesting time...
     
  23. bommai macrumors 6502a

    bommai

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    #23
    Personally I like Tidal Hifi the best for its lossless music but $20 per month is a little too much for me.
     
  24. chrisone macrumors member

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    #24

    You can turn that off
     
  25. purgatori_sakkara macrumors member

    purgatori_sakkara

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    Australia
    #25
    I disagree pretty strongly with this, at least when it comes to desktop apps. iTunes handles locally-stored music collections much better than Spotify does, and it merges one's streaming and local libraries seamlessly. iTunes/Apple Music is also much better for large collections, as there is no cap on the number of songs that can be added to a user's library---something that can be a real show-stopper for someone who listens to a lot of artists and wants to be able to save all of the albums, EP's, etc. for those artists to their collection.

    In terms of suggestions, I find both services pretty much of a muchness, in that neither of them really seem able to gauge a user's musical tastes with a fine degree of precision. They might figure out that you're into heavy metal, classical, and electronic music, but they won't go that step further and figure out that the only type of heavy metal you're into is atmospheric black metal, or that prefer baroque to renaissance composers and so on. That being said, I find that within the broad genres that Apple Music does deal with, the curated playlists are much better than the Spotify's haphazard assortments. For instance, Apple Music will put out lists like 'Sunn 0))) Family Tree' where they feature works from the side-projects of Sunn 0)))'s various members, or 'Classicaltronics' where they focus on pieces that classical composers have written for digital/electronic instruments and so on. I find that I end up discovering a lot of new artists and albums this way, even when my 'For You' page delivers 90% of the same off-target recommendations each day.

    And all of the above isn't even touching on all the other features that iTunes comes packed with. Spotify has only just recently started to feature podcasts, and it's still a long way behind iTunes in that department, and music videos are completely absent (or at least were absent the last time I used Spotify a few months ago). Which isn't to say that Spotify isn't awesome---it is---and I'd definitely put it ahead of Soundcloud and Google Whatever/YouTube, but I think that it's clearly outclassed by Apple Music in a number of respects.
     

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48 July 23, 2018