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Spotify Announces Dramatic Upgrade for Free Service to Increase Paying Subscribers

Spotify announced a series of improvements to its free tier at a press event on Tuesday that it says will help boost the number of users on its paid premium service. These include a wide variety of enhancements to its mobile app, including more control over how to explore, more access to playlists and other music, greater recommendations when building playlists, and a reduction in the amount of data it uses. This also includes smaller embellishments such as proactively caching songs that listeners are likely to want to hear based on previous listening habits.

“We know it’s the only way we’re going to achieve our goal of getting billions of fans” on the service, said Gustav Soderstrom, chief R&D officer. “We’re doing this because we know it will drive growth: the better our free experience the more likely it is that free users will become premium users.”

He compared the service’s free tier to broadcast radio in the 1990s, and how it drove business to record stores. “Now, Spotify is both the radio station and the record store,” he said, pausing before throwing a little shade at the radio industry, “but unlike radio, we actually share the revenue with artists and users.”

He said that more than 90 million users are on free tier, and that 60% of the paying users in 2017 started out as freemium users.

“We’re proud of helping to bring the music industry back to growth,” he said. “If 71 millon people paid out of 150 million, just imagine if we scaled that to the size of broadcast radio.” And with more than 2 billion social-media users in the world, he said, “Music is potentially bigger than social media networks.”

With such a dramatically improved free tier, one might wonder what the appeal is in a paid service. That, actually, remains largely the same: “More control, much better personalization to help discover new music, no ads” said vp of growth Babar Zafar. He added that a “Select data saver” option can save up to 75% of mobile data. He said more improvements on data usage are in the works.

Global head of creator services Troy Carter spoke about the new model’s impact on artists, who are naturally suspicious of expanding the services free options. He spoke of the country artist Garrett T. Capps, an independent musician whose music began popping up on Spotify playlists after a buzzy South by Southwest appearance. It was then discovered by “Billions” showrunner (and former A&R executive) Brian Koppelman, who used one of Capps’ songs in an opening scene of the show’s season premiere. Carter displayed an email from Capps that said in part, “Brian is a true fan and really wants to help me because of Spotify’s badass algorythms.”

He also told a story about Shawn Mendes’ label, Island, wanting to restrict his last album to the paid tier, but were won over by the number and enthusiasm of the users on the free tier.

“We’re serious about wanting to help a million artists,” Carter said, repeating an oft-said Spotify mantra. “But in order to do that we have to get more people on the platform.”

Citing regulations, the execs declined to discuss the company’s financials or its public listing, and when asked about specific artist royalties, Soderstrom said, “We have many, many different agreements with labels, so we can’t really comment on that.”

The theme of the conference was clear to users from the minute they walked in: Every song playing over the P.A. had the word “free” in its title, from Cream’s “I Feel Free” to Beck’s “I’m So Free” to Candi Staton’s “Young Hearts Run Free.”

 

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