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How the Streaming Model is Changing: A Look at Spotify
How the Streaming Model is Changing: A Look at Spotify

Up until now, streaming growth has been steady, driven by Low prices, Access to all the music in the world,The same experience for all users

Ángeles Delfina Herrera avatar
Written by Ángeles Delfina Herrera
Updated over a week ago

This strategy focused on attracting as many people as possible without worrying about audience segmentation or maximizing revenue per user, which was extremely effective. However, in the US, growth has slowed each year from 29% to less than 6%, with a steady decline.

We now see an entirely different streaming version aimed at profitability and involves several significant changes.

First, the prices for streaming services, which have been $9.99 for 12 years, started increasing last year, and more hikes are expected in 2024. The goal is for users to get used to this new reality.

Additionally, a stronger push exists to convert free users into paying subscribers. In the first quarter of 2024, a Spotify premium user was worth 13 times more than a free one. Recently, access to lyrics for free users was restricted, and Sony Music has called for an end to free music streaming. Free trials are likely to be shortened to no more than three months, with minimal access and more incentives to convert to paid versions. The ultimate goal is to boost revenues for both streaming platforms and artists, ensuring more excellent financial stability and enabling reinvestments in new talents and technologies.

Previously, plans offered the same experience at lower prices to attract more people. New tiers aim to generate revenue and segment fans, offering free, music-only, audiobooks-only, music + audiobooks, and the Music Pro add-on. Direct artist subscriptions are also expected, likely as multi-platform add-ons providing exclusive content and access. This improves user satisfaction and allows artists to reach more specific and engaged audiences.Spotify focuses on monetizing listener attention, selling it to artists and record labels looking for reliable ways to reach their audience. Using tools like Marquee and Showcase in a two-sided marketplace, where artists become the customers and listeners, the product. These ideas will pursue interactivity, creation, and fandom, though it remains to be seen who will successfully implement them.

Spotify's adjustments aim to make the new model viable by reducing royalties in exchange for greater exposure through Discovery Mode and reclassifying premium tiers as "bundles." *The most damaging aspect* This is part of efforts to balance the economic margins.

Conclusion: After years of rapid subscriber growth, it's time to be profitable. Changes to the model and adjustments are becoming more defined. Streaming services like Spotify must extract more value for fans and artists.

These changes redefine how music is consumed and monetized, offering challenges and opportunities for everyone involved.

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