US Spotify Users Differ from Global

Fewer Premium Members, with Higher Churn Rate

Consumer Intelligence Research Partners, LLC (CIRP) today released analysis of user consumption patterns for Spotify Technologies S.A. (NYSE:SPOT) for the second quarter of 2018.

As of June 30, 2018, CIRP estimates that in the US, 35% of Spotify users have a Spotify Premium subscription (Chart 1). Of these Premium subscribers, 55% have an Individual subscription (Chart 2).

  Chart 1: Current Spotify User Profile Chart 2: Spotify Premium User Profile

Chart 1: Current Spotify User Profile Chart 2: Spotify Premium User Profile

In our first survey of Spotify users, we can see differences between the US and the rest of the world. In the US, a somewhat lower percentage of listeners have Spotify Premium compared to the global share. The US is a competitive market, with a number of options for both free and paid streaming music. And, among these Premium subscribers, over half have the standard Individual membership, while one-quarter have the broader Family Plan, which offers multiple individual accounts for a single higher monthly fee. A significant percentage of Spotify customers have chosen these alternative subscription options.

Among US Spotify Premium members in the quarter:

  • 11% of of Ad-Supported Spotify listeners began a trial Premium subscription

  • 74% of trial Premium subscribers continue with a paid Premium subscription when a trial ends

  • 16% of paid Premium subscribers ended a subscription, and either reverted to Ad-Supported Spotify or stopped using Spotify.

Spotify’s financial success depends on creating a robust funnel of users, converting casual listeners that download the app to long-term paid Premium subscribers. Spotify encourages free Ad-Supported listeners to begin a free or nearly-free trial of a Premium subscription, typically of seven or thirty days. It then seeks to convert that trial to some form of paid Premium, with users paying for the service monthly. The monthly payment plan does allow Premium subscribers to cancel at any time, a situation that Spotify calls ‘churn’. We estimate a US churn rate of 16% for the quarter, higher than what Spotify suggests is the global rate. Again, we attribute this to a competitive US market, with many choices for paid and free streaming music services.

CIRP bases its findings on surveys of 500 US subjects who used Spotify in the period from April-June 2018. For additional information, please contact CIRP.