Is Spotify’s ‘freemium funnel’ really working as well as they think?
Spotify says definitely yes, though very serious questions on sustainability are emerging. According to data now confirmed, Spotify has 20 million paying subscribers, but a total of 75 million overall users, of which 55 million aren’t paying anything at all. Previously, Spotify disclosed a paying subscriber total of 15 million, on a total overall user level of 60 million.
All of which means that for every 1 paying subscriber, Spotify adds 3 non-paying, freemium users.
So, is that good, or a serious problem? On the negative, there’s little indication that Spotify’s freebie dead-stock will be converting anytime soon, which presents a serious problem to labels and artists. According to data compiled by the Big Three major labels, 69% of paying subscribers make their decision within three months of having free access. That would explain recent moves by the majors to pressure Spotify to close its free-access tier to three months, though according to executives speaking with Digital Music News, recent investigations by US attorneys general in New York and Connecticut may be cooling those efforts.
In response, Spotify has flatly denied any reports that its unlimited free access window will be shortened, despite plans by Apple to limit free-access streaming to three-months only.