During the last several months, the price of Spotify has gone up. This was due to an increase in the number of people who were signing up for the service. However, this price increase has come at a very bad time for the company. The revenue generated per user has fallen drastically.
Apple forcing Spotify to sell audiobooks through in-app payment feature
Almost a month after launching a new feature, Spotify has been rejected by Apple three times for its new audiobook purchasing feature. Spotify has also been criticized for ignoring a simple Apple rule that would allow the company to sell audiobooks in the iOS app.
Spotify claims that Apple forced them to build a confusing purchase flow for audiobooks. Spotify CEO Daniel Ek says that Apple rules are anti-competitive. He believes that audiobooks will grow into an important revenue stream for the company. The company has over 300,000 titles in its library. It’s relying on spoken word content to turn larger profit margins.
Spotify launched its audiobook feature in mid-September. The company advertised 300,000 titles, but the feature didn’t work as intended. Customers received an email with a link to buy the book, but no price information. They then had to navigate to Spotify’s audiobook hub to complete the purchase. The company’s legal team looked into allowing non-Apple payment methods. It urged regulators to allow this.
Spotify says that it has attempted three times to fix this issue. The company has also filed an antitrust complaint against Apple in Europe. It wants to avoid paying Apple 30% of its revenues from in-app sales. It also wants to be the “premier audio outlet” for consumers. But it hasn’t updated its iOS app in over a month.
Spotify has tried to redesign its audiobook buying process, but hasn’t been able to come up with a solution that’s both user-friendly and Apple-approved. Spotify tapped a former start-up founder with a law degree to spearhead the effort. He worked with a team of product designers and engineers to come up with four possible solutions. One of them was approved.
The company’s associate general counsel says that the App Store’s rejection of their workarounds is arbitrary. The company has been trying to get around Apple’s rules since its introduction. The company has been able to create three workarounds, but each one has been rejected.
One of the App Store’s most recent rule changes allows developers to make a few non-in-app purchases. Spotify has tried to use this rule to encourage its users to purchase audiobooks outside of the iOS app. However, Apple has a lot of rules, and it hasn’t been willing to budge.
Declining revenue per user
Despite growing to nearly 450 million monthly active users, Spotify’s average revenue per user continues to decline. The service has also shifted its focus towards family plans, student deals and other bundles, instead of only premium subscriptions. This has led to a decline in both premium subscribers and revenue. In the past few years, Spotify’s average revenue per user has been declining at a rate of 20%.
However, this has been largely driven by a product mix shift. Spotify’s premium subscribers represent 77% of the global music streaming market. They paid an average of 4.41 euros per month in the second quarter. Spotify also announced small price increases in the United States and Brazil. The company plans to increase prices in a handful of markets in the future.
The company says that price increases haven’t negatively affected churn rates. However, churn is higher in new markets. Spotify will raise prices for existing subscribers in June. The company also plans to add more users to its service.
Spotify plans to grow its premium subscribers to 183 million by 2021, with an average revenue per user of $5.25. This would make Spotify’s premium ARPU higher than its Ad-Supported revenue. The company expects to generate EUR2.6 billion in revenue this year. Spotify’s total revenue would exceed $10 billion for the first time in 2021.
The company expects its premium subscribers to grow 13% year-over-year in 2Q22. This means that in two years, Spotify will have nearly one-third of the global music streaming market. The company is also planning to add podcast subscriptions, which will generate additional revenue. This is a key growth area for Spotify. However, it is unclear how much podcast subscriptions will add to the company’s overall revenue.
Spotify recently launched the Loud & Clear website. This offers ad-free podcast streaming. It also offers a two-person Duo plan that costs less than a family plan. The company has expanded to emerging markets, allowing it to offer prices at a lower cost.
Spotify said that its product mix was the primary reason for the decline in its revenue per user. It also said that its geographic mix was also a large factor. It said that meaningful contributions came from the US, Russia, and Mexico.
Plans for an extra-premium tier called Spotify Platinum
During the third quarter of 2022, Spotify recorded a 20% growth in total active monthly users. However, the company’s quarterly revenue grew by only 21%. The company is also rumored to be considering a price increase for plans for an extra-premium tier called Spotify Platinum.
Spotify’s Platinum tier subscription package includes Audio Insights, Headphone Tuner utility, and Playlist Pro. These benefits are similar to what you would get with the Amazon Music Unlimited service. However, Spotify’s Platinum tier is more expensive, at around $20 a month.
In addition, Spotify is rumored to be testing an ad-supported subscription tier called Plus. This subscription tier is currently being tested with a small group of users, and is a fraction of the price of Spotify Premium.
There are currently four Premium subscriptions: Premium Individual, Premium Student, Premium Duo, and Premium Plus. The Premium Individual plan costs 9.99 a month, and includes unlimited on-demand playback. It also comes with ad-free music listening and free downloads.
The Premium Student plan costs $4.99 a month and includes ad-supported versions of Hulu and SHOWTIME. It also comes with unlimited skips and free downloads.
Spotify has a large catalog of music, and users can enjoy music on the go with Spotify Connect. However, the company has not yet introduced a lossless audio streaming service, and it is unclear whether it will.
Spotify’s HiFi service, which was announced in February 2021, will provide users with CD quality lossless audio streams. Originally, the service was scheduled to launch in a handful of markets by the end of 2021. However, the service was delayed due to licensing issues.
Spotify may be on track to release an extra-premium tier called “Platinum.” This tier could cost between $20 and $30 a month, and could include higher quality audio. The company has not yet confirmed whether it will support immersive audio streams like Apple Music.
In the past two years, Spotify has exploded with podcasting content. A Morgan Stanley survey found that podcasting content increased users’ time on the app. Spotify is also considering reducing ads when listening to podcasts.
Will Ek remove Kanye West’s music from Spotify?
Earlier this year, Kanye West’s comments about Jews and anti-Semitism caused uproar. In an interview with the Reuters news service, Spotify CEO Daniel Ek called the remarks “awful” and said he would not remove the music of the rapper from the streaming service.
In May, Spotify introduced a new hate content policy that prohibits users from making dehumanizing, bigoted, or hateful remarks about any person, group, religion, or country. Ek also said that West’s comments were not covered by this policy, and that Spotify would not remove his music without a label request.
The company is also facing criticism from the public, who are calling for Kanye West’s music to be removed from its streaming service. Kanye West is not the only artist who has been embroiled in controversy since Paris Fashion Week. His clothing brand, Yeezy, has been dropped by Adidas, and the talent agency has cut ties with him as well.
The rapper wore a shirt with a white nationalist slogan at a fashion show in Paris, and was criticised for the tone-deaf move. West also made anti-Semitic remarks in interviews and on social media. He has refused to retract the remarks or amend them.
Ye has a large music catalog, with 51 million monthly Spotify listeners. The company is not planning to remove all of his music from the platform, but it does plan to test it for hate speech. A test would be conducted if Ye releases new music, which is likely.
While Kanye West has lost business partnerships, his music remains on all major streaming services. His music catalog has not been pulled from Spotify and his albums remain available on YouTube Music and Apple Music. However, some artists have been de-playlisted by the service. For instance, XXXTentacion’s music was removed in May, but XXXTentacion’s recordings have returned to playlists.
Def Jam, which holds copyright to many of Kanye West’s songs, hasn’t requested the removal of his music catalog from Spotify. Instead, Def Jam has condemned Ye’s anti-Semitic remarks, and has expressed that it wants to be a leader in addressing hate speech on the platform.
