Spotify Is Losing College Students, Study Finds…

spotifysurvey1

Spotify is already peaking amongst college students, according to survey data now emerging.  The survey, conducted at the University of Georgia and published by professor David Lowery, shows that students are rapidly abandoning full-priced, $9.99-a month Spotify accounts.

They may also be leaving the service entirely.  “Revenue from paid subscriptions for the service appears to have already peaked for this important group,” Lowery noted.

At the very least, the data shows a downward trend in price.  Just last year, Spotify introduced a special, $4.99-per-month student rate, a move designed to court the cash-strapped demographic.  But instead of drawing fresh faces, the move appears to be causing a migration from higher-priced, $9.99 accounts, while the overall number of subscribers declines. “This [decline] appears to be the result of students switching from the $9.99 service to the $4.99 service,” Lowery continued.

“Or put another way Spotify is cannibalizing it’s own paying subscribers resulting in lower revenues even as it loses overall popularity with these students.”

Roughly 200 students participated in the study.

29 Responses

  1. Bas

    “At the very least, the data shows a downward trend in price”

    Sorry, but there are not actually enough data points in this article to actually prove a trend statistically.

    Reply
    • Insider

      Agree. Sample is small. Also, “paying” has improved from 33% to 35%. The price is not relevant. They want to get people to pay, and they want to get them paying as adults. It is a long term strategy.

      Reply
    • Sam

      200 participants is more than enough to perform a one way repeated anova. There are likely other assumptions which were violated, but sample size isn’t one.

      Reply
  2. Jacob

    Except that Spotify has a student discount for college students so that the premium account, which used to cost $9.99 now only costs $4.99, which negates the entire survey’s results.

    Reply
      • Name2

        There’s 6% less interest in the FREE tier from 2014 to 2015.

        Fewer people want FREE.

        So yeah, an overall decline in interest in being tethered to Spotify is manifest. Or…. these people find $4.99 without ads to be a sweet spot, because there’s a 7+% uptake in the student tier.

        So what tier is the Student/$4.99 tier actually cannibalizing? $9.99ers? Freebies tired of ads who find $4.99 enticing?? Do you have any actual data? Because what’s above is not making your case.

        Fail.

        Reply
        • Vail, CO

          A lot less people are using the service in just one year. If I’m Spotify, I’m wondering why there’s a drain, and if I’m Lucian Grainge I’m wondering why there’s so much less money from such an important group.

          Reply
          • jw

            If I’m Lucian Grange, I’m needing a lot more substantiation before these numbers mean anything to me.

          • Vail, CO

            He already has all the numbers! And that’s why he fired Rob Wells.

          • Name2

            A lot less people are using the service in just one year.

            And your basis for “a lot less”? As LLBoF states, in another posting,

            I would like to see the total number of survey respondents

            We don’t have any raw numbers.

            Overall, a given survey respondent is less likely to be a Spotify user in 2015 than in 2014, but in 2014, the ratio of leechers to paying customers was 52:34 (1.53). In 2015, that ratio was lowered to 46:36 (1.28)

          • jw

            lol.

            200 each year? Or 200 over the course of 2 years?

    • David

      Do you suffer from reading difficulties? Did you miss the part of the article that said ‘Just last year, Spotify introduced a special, $4.99 student rate, a move designed to court the cash-strapped demographic. But instead of drawing fresh faces, the move appears to be causing a migration from higher-priced, $9.99 accounts, while the overall number of subscribers declines’? So the student discount doesn’t negate the point of the article: to a large extent it (or rather its failure) *is* the point of the article.

      Reply
  3. yep

    …and male hairdressers (with Black hair and mustaches) who live in Scotland are also signing up to the premium service 5.4% less than in 2014…

    Another positive Spotify story from DMN.

    Reply
  4. Liar Liar Blogs on Fire

    I can’t seem to find a way to post a comment on Lowery’s blog, so I’ll do it here, as I would guess that he’s paying attention.

    David — I would like to see the total number of survey respondents, and breakdown per answer choice. Is this survey statistically significant at all? I have serious doubts. My guess is that you surveyed students in the UGA Music Business program and probably received less than 250 results in both surveys.

    Reply
  5. jw

    Wow.

    Offering a temporary discount in hopes of a longterm upsale is something called marketing. Glad Dave really got to the bottom of this. Clearly the future industry is great hands, with Professor Lowery shaping these young minds.

    But if Spotify is losing overall popularity, & yet download sales continue to fall, where are students turning for their music? Students NOT digitally downloading jumps from 26.5% to 36.7%, & not using Spotify jumps from 13.6% to 18%. What’s the explanation? I’d love to know how many students participated in this study… could be that there’s just not enough data for any of these percentages to really mean anything.

    Reply
  6. Remi Swierczek

    They’ll loose half of $4.99 accounts and 1/3 of the & $9.99 when dead-Beats will start own music shredder.
    People just love Apple!

    Reply
  7. Sarah

    There really isn’t enough info here to draw meaningful conclusions about the market. However, it shouldn’t shock anyone that, giving the choice between paying X and paying 2X for the exact same service, most people are going to prefer the lower price.

    As far as marketing goes, giving people lower prices to incentivize them to try a new service is a well-established technique. But there’s a risk of people becoming accustomed to the lower prices and therefore eventually unwilling to pay the higher prices (which have become perceived as “overpriced”). That’s especially true in this case, where the temporary discount is not so temporary in the consumer’s mind – this discount can last so long that it becomes “normal” rather than “a special discount.”

    Reply
    • jw

      I think college kids are used to student discounts. They’re not going to stop going to movies after they lose their student status just because they have to pay full price.

      What’s not mentioned in the article (here or on Trichordist) is that Spotify no longer offers the $4.99 Unlimited plan. Users who signed up for Unlimited were grandfathered into that plan, but I have a feeling that Unlimited users who upgrade to Premium for the same price will not be able to go back to Unlimited, & will, upon losing their student status, be left with the choice of Free with commercials or $9.99 Premium. So it could be that they’re offering the discount in hopes of converting an even larger percentage of subscribers to $9.99 over the next 4 years.

      This is all stuff I’d expect a college professor doing a “study” would be exploring, but I guess all you can really count on Professor Lowery for is snarky condescension.

      Reply
      • GGG

        Why spend time doing research when you can have your unpaid commenters do all your work for you!

        Reply
      • David

        Good point. Maybe the reason nobody mentions it is that the elimination of the ‘mid-price’ tier was done very quietly. Deezer seem to have followed suit. (Rdio still apparently have the mid-price option in the form of a ‘discount’ for web-only users, if you search hard enough to find it.) Personally I think Spotify’s insistence on having no option in between ad-supported and ‘premium’ is just crazy, especially when they also reject the idea of exclusive content for premium users. So they give free users no real incentive to switch from ‘free’ to paying $120 a year. Who is going to pay that just to avoid hearing an ad every three or four tracks? Although Spotify pay lip-service to the aim of converting free users to paid, actions (or in this case inactions) speak louder than words. So what, if anything, is Spotify’s real long-term strategy? I can only suspect that they aim to first establish complete dominance in the music market, by driving out paid downloads and other streaming services, then pressure the labels and artists into accepting even lower royalties on the basis that ‘there is no alternative’. In other words, the Amazon strategy for books, but applied to the music market.

        Reply
  8. WeAllKnowJWWorksForSpotify

    Nice JW. You got to resort to an ad hominem attack. At least Lowery is doing the basic math, instead of making wild unsupported claims. And unlike you he’s not a corporate shill. Lowery has the balls to post stuff using his real name. Who the fuck are you JW? Other than a cowardly piece of shit.

    Reply
    • jw

      Says the man (or woman, who knows?) posting anonymously…

      What are my wildly unsupported claims? Point them out & I’ll support them.

      Reply
  9. RockNRoll Buddha

    Its not just College Students. Over the last 2 weeks, I’ve been at lunches/dinners with friends with High School age kids. 2 were from Rhode Island, one was from New York, 2 were from Texas and 2 were from California.

    I’m always curious as to how kids this age are discovering/listening to music. Every one of these kids ( 4 girls/3 boys) told me the following:
    – They rarely use Spotify, if ever. If they use any of the streaming services, its Pandora – but they don’t use it that much because its not really on demand. They aren’t even aware of any of the other services and never use them.
    – None of them listen to the radio for music. Not one.
    – They all had iTunes accounts, and used iTunes to listen to music EVERYWHERE. 4 had their own cars and said they plugged in their phones to the car stereo and listened to iTunes that way going to and from school.
    – They either buy music from iTunes if its a song they REALLY like, or just get an MP3 from a friend and load it into iTunes.
    – They all said they watch/listen to Youtube and that they discover new music from Youtube or a friend’s recommendation.
    – They all said they liked music and listened every day – but it was more an accompaniment to what they were doing (passive listening) as opposed to being an active, in the moment listener.
    – Only 1 out of the 7 had Shazam on their phones and 50 out of the 7 didn’t even know what it was.
    – They all had Facebook pages, but only 1 was active on their page on a weekly basis. The rest said that they hadn’t deleted their pages, but rarely ever use them anymore. All 7 were on Snapchat and use it every day. The only other Social Media any of them used regularly was Twitter.

    Very small sample – but it was incredibly eye opening to me…. The things that we continue to chase as far as getting artists in front of potential young fans is completely bypassing these kids.

    I’m certainly adjusting how I’m working my artists going forward, especially the younger acts.

    Reply
  10. Bobby

    I was ready to bite the bullet and get a $10 subscription, only to find that the price had gone up to $13. Give me a break. Music is free. You shouldn’t be more expensive than Netflix, idiots.

    Reply
    • Caroline

      Bobby, it’s $13 if you buy it through the app, but 9.99 on their site. Probably the Apple tax kicking in

      Reply
  11. UGAeconBBA

    As a graduate of the Terry’s Economics Program, I am disappointed to see professor Lowery’s contributions to this article, as well as, Cecelia’s Kang’s Washington Post article, “In turmoil again, music industry once more looks to Apple to save it.”

    The supporting evidence for this study is laughably incomplete and rooted in questionable assumptions.
    (1) The intention of this program is to build loyalty by offering university students a more affordable option. If the $4.99 price point delivers the same level of services to university students as the $9.99 option, you would be an idiot not to take advantage of this offer and expect the data to reflect the same. I’m surprised to see that 10% of students are still paying for the $9.99 service at all!
    (2) What the limited data can validate (within its limited sample size) is that Spotify’s $4.99 offering has lured more users away from their free service. This short investment could lead to increased and long-term revenue streams once these individuals graduate.
    (3) The data shows an uptick in non-Spotify users in 2015. Despite showing up more than 3 years late to the party, Apple now offers a streaming music service and high-fidelity streaming via Tidal was also released this year. You would expect to see some loss of market share, as streaming customers are lured by new entrants to the once limited streaming music providers.
    (4) More valuable insight would be gained by evaluating what % of recent graduates continued to use Spotify after losing the $5/month incentive to college students.

    I can’t help but think that Mr Lowery’s nostalgia for his college experience in tech valley (University of California Santa Cruz ’84) has left him biased to the folks in Cupertino… Unfortunately, this comes at the expense of the quality of reputation of my Alma Mater.

    Reply

Leave a Reply

Your email address will not be published.

Verify Your Humanity *