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How will Spotify subscribers react to another price hike?
Spotify recently announced plans to increase subscription prices in July 2024. This came just one year after a similar price increase in July 2023. How are Spotify users reacting to this change?
YouGov surveyed 1,000 US adults and reviewed BrandIndex data and identified 5 key insights.
- Most Spotify paid subscribers will keep their current plans
Looking specifically at paying subscribers, YouGov data indicates a fairly strong degree of loyalty. When faced with another price increase, 61% of paid users say they would continue with their current subscription, 19% say they may cancel their subscription, while only 4% will definitely cancel.
2. YouTube Music is the biggest threat
We asked Spotify users if they do decide to cancel their subscriptions, where would they go. The answer paints a competitive landscape. Among all Spotify users (including free tier users), YouTube Music emerges as the top contender, with 39% indicating it as a potential alternative. Additionally, a significant portion (around one-third) would consider switching to Amazon Music (32%) and Apple Music (32%). Legacy services like Pandora (24%) and satellite radio provider SiriusXM (12%) also appear as potential destinations.
3. Playlists and music selection are making subscribers sticky
What keeps users tethered to Spotify despite potential price hikes? For paid subscribers, playlists (54%) and music selection (51%) are the most valued features. While less prominent, podcasts (28%), Spotify-curated playlists (24%) and Spotify Wrapped (24%) also play a role in user retention. Interestingly, brand loyalty itself (21%), audiobooks (19%), and even the perceived shortcomings of the free tier (17%) contribute to user stickiness.
4. Better sound quality would help justify higher pricing
We also asked respondents what features could incentivize them to accept a price increase? Better sound quality (Hi-fi audio) emerges as the most attractive option, with 42% of users finding it appealing, followed closely by more music selection (38%). Around a third of all Spotify paid users would like to see music videos (36%), and improved playlist organization tools (35%). Features like trivia and games hold less sway (19%).
5. Any dip in users is likely to be temporary
Data from YouGov BrandIndex reveals that Spotify’s previous pricing increase, in July 2023, did not have a long-term impact on its Current Customer score. While the music streaming platform’s Current Customer score dipped slightly in the lead up to the price change, the brand recovered in the following month with a slight increase of 3-percentage points in August 2023.
As of June 2024, Spotify's user base is roughly split between free and paid subscribers, with the various categories of paid subscriptions shown below:
- Free (52%)
- Individual Premium (22%)
- Family Premium (17%)
- Duo Premium (5%)
- Student Premium (4%)
In the coming months, it will be interesting to see how Spotify's subscriber base reacts to the price increase. YouGov will continue to monitor Current Customer scores and brand perception to gauge user sentiment. Additionally, further analysis can be conducted to identify specific user segments more likely to churn or those most receptive to features like Hi-fi audio. This will allow for targeted marketing efforts and product development that cater to the evolving needs of a diverse user base. By understanding these audience nuances, Spotify can navigate the competitive streaming landscape and ensure its music continues to play on for years to come.
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Methodology: YouGov polled 1000 US adults on June 21, 2024. The survey was carried out through YouGov Surveys: Self-serve. Data is weighted by age, gender, political affiliation, education level and region. Learn more about YouGov Surveys: Self-serve.
Image: Getty Images