Spotify held an event in New York City today, unveiling a new version of its free music streaming tier that introduces a few new features for those users not paying for Spotify's $9.99/month main subscription plan.
The new free tier allows users to pick and choose which music they want to listen to on-demand, but only if the tracks appear within one of the 15 curated discovery playlists. These include Daily Mix, Discover Weekly, Release Radar, and more. Previously, free tier users were limited to shuffling songs at random.
New version of the free-tier’s mobile app. Includes new playlists to bring it closer in line to what premium offers. Also adds a low data mode to allow better streaming on capped data plans. pic.twitter.com/l05qO5r3SR — Eli Blumenthal (@eliblumenthal) April 24, 2018
CNET reporter Joan E. Solsman also mentioned that free users will have access to podcasts and vertical videos. Curated playlists, like RapCaviar, will also "stay the same across both tiers" of free and premium users.
There is also a new low-data mode that aims to cut data consumption "by up to 75 percent." In total, Spotify head of product development, Babar Zafar, said Spotify's free tier is "becoming much more like Spotify premium" with this update. As a note, the free tier will still have advertisements between songs.
In the past, Spotify didn’t allow offline listening for free, meaning that users were somewhat tethered to wifi if they needed to conserve data.
With the new data consumption system, which caches music ahead of time to stream via 3G, users can actually listen to much more music with wireless data. Alongside utilizing 3G, Spotify is also optimizing the streaming itself as well as the app (including imagery and other UI elements) to save data and power.
As Spotify expands its free service, Apple Music still only offers new subscribers a chance to try things out for three months at no cost. Afterwards, users must pay for a subscription or cancel their plan.
When asked whether the company is worried about losing paying subscribers to the newly expanded free tier, chief product officer Gustav Söderström said that it wasn't in Spotify's plans to make a free experience feel worse in order to get them to become paid subscribers. Still, over time the streaming service hopes a more robust free tier turns users into paid subscribers. "The more you play, the more you pay," Söderström said.
Top Rated Comments
Spotify's ad revenue is tiny compared to their premium subscriptions... so it's actually the paying customers who are subsidizing the free customers.
At least that's how I understood it when this topic has come up in the past. Someone can correct me if I'm wrong.
EDIT: I just found some numbers. Spotify's ad revenue us just 10% of their total revenue.
Basically... 10% of their revenue comes from ads... yet their free users represent 45% of their userbase.
So yes... it appears that Spotify's paying customers are funding their free customers.
Back to the topic. Artists get paid on both tiers. Almost all of the money Spotify pays goes to the artists, labels, publishers, etc.
Spotify pays so much... that there's no money left for themselves. That's why they have always posted a loss every year since their inception.
Now that Spotify is a public company, giving away the free option isn't likely to be able to continue forever. It will have to become more and more constrained in order to push people to the paid tier. They have a responsibility to turn a return for shareholders and losing money through the free offering isn't going to be acceptable.
* Apple Music is gonna overtake Spotify.
* People will get triggered.
* “I’m surprised”
* “Muh recommendations”
* “DAE iTunes bad”
They say they're downloading content while you're on wifi before you actually listen to it. That's how it's optimized - they're just guessing which tracks you're most likely to pick to listen to, and downloading them when you're on wifi, before they're actually requested. Since you're limited to a set of their playlists and radios that only amount to ~40 hours of content if you're on the free tier, having a 75% reduction in downloads really just means they download 30 hours of content per month while you're on wifi.
Also, they've had the free tier for forever. They just expanded it a bit. Not enough for me to revert from paid to free, but probably enough to bring in several people who had been resisting so far. You'll try it on and off for a few months before they hook you and you become a paid user who's too lazy to cancel your subscription later on.
Free tier now includes full access to Discover Weekly, which is Spotify's Ace that Apple seems oblivious to.