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Spotify beefs up its free tier with on-demand playlists


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Spotify has unveiled its new mobile app, and as expected, it includes providing free users with on-demand access to some of its key playlists. In doing so, it has given its own playlist brands an even-more front-and-centre role on the streaming service.

The company announced the new app – tests of which Music Ally reported on in February this year – at an event in New York, where a recurring sub-narrative was Spotify’s determination to continue focusing on aggressive growth of its free tier, which it sees as crucial to the expansion of its paying subscribers.

“We think it’s going to have a significant impact not just on Spotify but on their entire music industry,” said Gustav Söderström, Spotify’s chief R&D officer, at the event. He also turned some of the past rhetoric of Apple Music’s Jimmy Iovine – the one about that service’s rivals being mere ‘utilities’ – back on him.

“We are not just in the business of giving access to music – we are in the business of music discovery,” said Söderström. “We think the others are still in the business of giving access.”

Today’s changes have been driven partly by the fact that Spotify’s mobile app is well overdue a refresh, and also by the fact that the company’s own data shows it that many new users are taking a mobile-first or mobile-only direction with their consumption.

Free listeners will now have access to 15 key playlists (such as Discover Weekly and RapCaviar) and 750 tracks on-demand, the equivalent of around 40 hours of music. This compares to Spotify’s previous approach, where free users were restricted to shuffle mode.

That change involved a renegotiation of licences with record labels – although no details of what those renegotiations involved was forthcoming – to give free users even more functionality within the app.

Spotify is also introducing a ‘smart cacheing’ feature that it says will reduce mobile data usage by up to 75%: a make-or-break issue for a swathe of young and/or low-income users on the free tier, who were restricted in how much music they could play a month when away from a Wi-Fi network.

Söderström said that the new features will be an even more effective conversion funnel for Spotify. “We see ourselves as the R&D department for the whole music industry,” he said. “The music industry has never really had a R&D division before – that is our mission.”

(A penny for the thoughts of some major labels in response to that, given their belief – for example expressed at this morning’s IFPI event in London – that labels are also investing significantly in building technology to support their artists.)

They’ll likely be happier with Söderström’s rhetoric on the potential for yet more growth in streaming revenues for the industry, though. “If that happens, the glorious 1990s will look like a practice for what happens next,” he said.

By choosing 15 playlists that Spotify’s 90 million-plus free users can access on-demand, there’s an argument that the company is shining an even greater spotlight on those specific playlists – which of course, are all its owned-and-operated brands.

That, in turn, could be seen as the latest move to lock out third-party playlists as an entry-point for new Spotify listeners in the coming months and years, although cynics may point out that this particular door has been locked for some time.

The messages from Spotify were, of course, positive. Troy Carter, its global head of creator services, talked about a sea-change in artists’, managers’ and labels’ attitudes to Spotify’s free tier, including the long-running debate around windowing music to premium users.

Carter talked about his work convincing artists that Spotify’s free tier was as important to them as its premium tier, because that was where the discovery process begins for many listeners.

As examples, he talked about independent country singer Garrett T Capps, who began bubbling up on playlists following his appearances at the SXSW festival.

After making his way onto the Discover Weekly playlist of a prominent television music-supervisor, his track ‘Born In San Antone’ was used in the opening episode of the latest season of TV drama Billions, which in turn drove a spike in Capps’ entire catalogue on Spotify.

A second example was a bigger star, Shawn Mendes, whose 2017 album ‘Illuminate’ was a candidate for premium-windowing until Carter spoke to Mendes and his team, showing them data indicating that the bulk of his listeners were on Spotify’s free tier. The windowing plan was scrapped.

Carter noted that 71% of Spotify’s monthly active users on the free tier are aged under 31, and indicated that this stat is being presented to the music industry to stress the importance of the free tier. It was surely a prominent piece of evidence set forward in the necessary licensing negotiations for today’s changes.

“I think we are going to see stories like this happen more often,” said Carter. “We are focusing on scale. The bigger we get, the more we pay out to creators.”

Today’s news represents one of Spotify’s deftest plays to date, bucking expectations that its free experience has to be markedly worse than its premium experience. The company is betting boldly that the changes will pay off, and fuel continued rapid growth both for its free and paying users.

And with each new user that comes in via the free experience, Spotify is also cementing the role of its key playlists in their music-discovery experience.

Eamonn Forde

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