Cracks could be appearing in the business model of hugely popular music streaming service, Spotify, which has remodelled what it offers around a cut-price subscription and a limited free service.
Spotify Unlimited costs £4.99 per month and gives subscribers unlimited PC access to the site’s music catalogue without being interrupted by ads, which have noticeably increased on the service in recent months. Users will also be able to access the service from abroad.
Unlimited has been stripped of some of the features of the established £9.99 Premium service, such as being able to access the service via mobile, offline access to playlists and higher bitrates, but modest sign-ups across its European user base for these features suggest many don’t need or want these extras.
Separately, the company has reintroduced the free service suspended last September, but this time users will have to put up with a 20 hours-per-month access limit in addition to listening to ads. Users who signed up for the ad-based service before September will continue to enjoy uncapped usage.
To date, Spotify’s problem has been about balancing the cost to the users with its own overheads for a service that sounds so fraught no other company has even attempted to make it work.
The free service was invented to draw users in with the hope that enough would convert later when they better understood the buying proposition. The ads were a way of subsidising this.
It’s not clear that enough users have been willing to pay the equivalent of £120 ($175) per year for the service, hence the halving of the cost for the basic ad-free service. Spotify needs the money as the industry watches nervously. Some have a vested interest inseeing it fail but many more hope that it will succeed in finding a new way of convincing the public to pay for digital music.
A full comparison of the new service tiers can be found on the company’s website.