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Spotify: US consumer a tough sell

7 April 2012 1,115 views No Comment

The latest revolution in pay forever music, Spotify, is failing in the marketplace, generating poor conversion and retention numbers. This casts the company’s recent decision to loosen a hated restriction on how many times free subs can play a song in a new light.

“People aren’t 100 percent happy,” an music industry insider told the New York Post. “Spotify overpromised, but doesn’t everybody?”

Perhaps not.

Spotify’s music as a service business model has been converting 30 percent of free listeners into paying customers in Europe. Here in the US it’s less than 20 percent, but that’s only half the problem.

“The question is, how sticky is Spotify? Is it able to hold on to users for more than a year?” another source said. “The free people are not signing up for a long period of time, or at the highest pricing tier, or they’re not renewing.”

A fraction of a concession

That said, free desktop subscribers are still expected to start paying for service after six months or face a hard 10 hour listening limit per month. However, Spotify’s five-play cap that limited how many times any one song could be played in a month has been lifted.

Not exactly bending over backwards to attract subscribers. Then again, the notion that you can pay every day for the rest of your life and die without owning anything is fundamentally flawed to begin with…

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