Over the past few years, Spotify (NYSE: SPOT) has rolled out new options for its listeners. Most recently, in July 2020, Spotify introduced its Premium Duo plan, which is designed for two-person households and offers two premium accounts for one discounted price. While the Premium Duo plan currently represents only about 2 percent of Spotify’s U.S. consumer transactions, a look at customer retention by acquisition price point indicates that the Premium Duo plan has a higher customer retention rate after 12 months than other Spotify subscription plans—including the Premium Individual plan, the Premium Family plan, and the Premium Student plan.
Spotify’s Premium Individual plan is its most popular paid subscription plan
Looking at the distribution of transaction values for Spotify, the Premium Individual plan is the clear frontrunner. Between October 2020 and October 2021, 63 percent of Spotify’s U.S. consumer transactions were between $9.00 and $11.99, which corresponds with the price of the Premium Individual plan. Premium Family plans (represented by transactions greater than $14.00) were the second-most popular premium option, accounting for 24 percent of U.S. consumer transactions during this time frame.
Eleven percent of Spotify’s U.S. transactions were between $4.00 and $5.99, representing the price of Spotify’s Premium Student plan. Spotify Premium Student plans also include access to Hulu and Showtime; however, these Hulu and Showtime subscriptions are captured as Spotify transactions in Bloomberg Second Measure’s data. Only 2 percent of Spotify’s U.S. transaction values from October 2020 to October 2021 were between $12.00 and $13.99—corresponding with the new Premium Duo plan.
Notably, this data only includes U.S. paid subscriptions. Spotify free plans, free trials, and international subscriptions are excluded from this analysis.
Spotify’s new Duo plan has the highest 12-month customer retention rate
While the Premium Duo plan is still relatively new, its customer retention appears to be outperforming other Spotify premium plans. Looking at average customer retention by acquisition price point, 83 percent of consumers who initially purchased the Premium Duo plan between October 2020 and October 2021 were retained after 12 months.
Among consumers who initially purchased a Premium Family plan (transactions over $14.00), 73 percent were retained 12 months later. For initial purchases of the Premium Student plan (transactions between $4.00 and $5.99), average customer retention was 70 percent after 12 months. Interestingly, the Premium Student plan had the second-highest average customer retention most months until the 12-month mark. A likely factor in the significant dip in average customer retention between months 11 and 12 is that Premium Student subscribers must re-verify their eligibility every 12 months.
Customers who initially purchased the Premium Individual plan (transactions between $9.00 and $11.99) were least likely to be retained, with 69 percent keeping their membership after 12 months.
What’s next for Spotify?
Spotify is continuing to roll out new content and features, including a lyrics functionality and a hub for music and playlists associated with Netflix shows. The streaming giant has also recently removed the shuffle default for albums, reportedly in response to a request by singer-songwriter Adele upon the release of her new album.
Spotify has doubled down on podcasts over the past few years as well, recently launching an additional service that enables podcast creators to charge a monthly subscription fee for access to their content. Podcast subscriptions are also excluded from this analysis.
To learn more about the data behind this article and what Second Measure has to offer, visit https://secondmeasure.com/.
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