On… Spotify’s billion-dollar pricing alternative
Forgive me for the misty eyes; I’m overcome with nostalgia.
MBW is busy making {a magazine} to have fun our tenth anniversary – MBW10 – and I’ve spent the previous few days placing the ending touches to it.
It’s a year-by-year retrospective of among the most eye-popping information to hit the music business over the previous decade, and it’ll be out with you nice MBW+ subscribers quickly.
My favourite oh-my-God-did-that-really-happen merchandise: The 2015 TIDAL convention the place music megastars lined up like The Avengers to signal a declaration of nothing-in-particular. And Alicia Keys mentioned: “That is for the individuals by the individuals, you already know?”
Loopy occasions. Anyway, mentioned journal has despatched me flicking by means of the MBW archives to revisit our earliest interviews, from January 2015.
One MBW Q&A revealed that month was with Jonathan Forster, who’d lately moved from his position as MD of The Nordics at Spotify to develop into the corporate’s head of gross sales in EMEA.
For context: at this level, Spotify had 60 million energetic customers, with 15 million paying subscribers. Immediately, it has roughly 12 occasions that quantity of customers… and 19 occasions (!) that quantity of subs.
I requested Jonathan at the very least one prescient query: “Some individuals appear to imagine the rationale you don’t have extra value tiers is since you haven’t considered it. That may’t be the reality, proper?”
He responded that Spotify was properly conscious of multi-tiered pricing choices, thanks very a lot, however wished to “10-X” its enterprise earlier than “noodling round optimizing what we are able to squeeze out of individuals in Stockholm”.
Immediately (November 13), having 10-X’d after which some, Spotify lastly started noodling. Not in Stockholm, however in India, South Africa, UAE, Indonesia, and Saudi Arabia.
The corporate simply launched ‘Premium Platinum’ in these markets – a tier priced at greater than double the earlier normal subscription that gates lossless audio, AI DJ options, and mixing instruments behind a velvet rope.
Spotify is taking part in down this transfer as a mere ‘pilot’ – a hands-off experiment in a smattering of commercially non-essential territories.
However everyone knows the place this ends. When Spotify’s ‘pilot’ inevitably lands in North America – and it’ll – the monetary implications are staggering.
Spotify has roughly 70 million paying subscribers within the US and Canada at this time, seemingly at round a USD $6 month-to-month ARPU.
If 20% of those subs ultimately improve to a doubled-price VIP tier, that’s an additional $1 billion in annual income – the majority of which will probably be shared with music rightsholders.
This isn’t simply wishful considering.
In China, Tencent Music already has 15 million ‘SVIP’ subscribers paying 5x extra for HD audio and different advantages – over 12% of its subscriber base.
For years, Common, Sony, and Warner bit their tongues as Spotify clung to its $9.99 month-to-month value level like a life raft.
When the platform lastly raised costs for the first time in 2023, the majors exhaled. Now, with ‘Premium Platinum’, they’ll virtually style the upside.
Music Enterprise Worldwide
