69% of Spotify Subscribers Make Their Decision Within 90 Days

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Major labels Universal Music Group, Warner Music Group, and Sony Music Entertainment are putting heavy pressure on Spotify to limit their free access window to three months.  And now we know why: according to data just shared by executives at the Big Three with Billboard69% of Spotify premium subscribers make the decision to convert from free within 90 days.

Spotify most recently reported 15 million paying subscribers, but a giant stock of 45 million who aren’t.  “We’ve looked at the data, and what has become clear is that the free funnel isn’t working,” a major label also told Billboard over the weekend.

“69 percent of those who subscribe after using the free tier do so within 90 days.”

Meanwhile, Spotify is firing back, and flatly denying that labels are pressuring for limitations on free access.  And, denying that there’s a problem: “Freemium is the only thing that’s working,” a Spotify executive quipped back.

But working for whom, exactly?

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All of this may not be going to a happy place for the hyper-valued Spotify: Spotify is currently in active negotiations with Universal Music Group, and Billboard revealed that the UMG contract officially lapsed at the end of 2014.  Unclear is what other deadlines are looming: just recently, Spotify’s 2011 contract with Sony Music Entertainment leaked, suggesting that negotiations are still ongoing on a refreshed deal.  The CEOs of both mega-labels have been extremely critical of unlimited free.

And then comes Apple.  As WWDC descends upon San Francisco, onlookers are waiting for the mega-mothership of ‘Apple Music‘ to land, complete with significant limitations on free — and major demands that Spotify do the same.


Top: Sony Music Entertainment chairman and CEO Doug Morris; image Spotify CEO Daniel Ek from leweb, shot by Magnus Höij and licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).


8 Responses

  1. Anonymous

    “Freemium is the only thing that’s working”

    The only thing that’s working is iTunes.

    It’s very simple: You can’t finance music production without it.

    • Anonymous

      If iTunes is the only thing that’s working, what do you think the market for music consumption should look like?

      Without completely removing the options of subscription streaming, YouTube, and piracy, how do you get iTunes to start generating sufficient revenue to sustain the industry?

      • Anonymous

        …convert Radio and streaming to $100B music store.

        • Sarah

          Um….. you aren’t the real Anonymous, are you? :)

  2. Silent Bob

    Look. Quit being fragile minions of delusion, drop the nirvana fallacy and consider an inventor. Consider, inquire, and be inspired. Contact Remi.

  3. Mike

    I am late to Spotify. I did use iTunes early for CD’s I had and a few albums I bought from there and Amazon on my Macs over the decades. I also was early to free Pandora via early Roku. But, that is more a radio station. Still, I think it is the most accurate in choosing what I like versus others.
    Then an Apple TV got my digital collection to my better stereo via Airplay. But it was still the same albums I had played on a CD player for decades. I slowed buying CDs because of space and money limitations.
    After not listening to much music the past few years dues to an illness, feeling better, I signed up for a year of paid Apple iTunes Radio. It was OK. Very good audio quality with the ACC files. Superb artists. Then when Spotify offered three months for 99 cents, I got into Spotify Premium. In theory, Premium and iTunes Radio should sound the same but iTunes sounds better.
    But Spotify as a platform just does so much more.
    At first, I did not get it. But the more I found various playlists and, more importantly, playlist sources (labels, artists, groups) I began to listen a lot more to music than I ever did.
    What this means is that I am playing and liking artists I NEVER heard or bought before.
    In that sense, I can see why many RICH and popular artists and their management do not like streaming. But, rather then me giving out $15-100 a year to 1-5 promoted performers for CDs or downloads (lately, $15-30 tops), I am instead giving out $120 a year. Every year. To a far bigger variety of artists and genres. I am constantly discovering new artists from around the world on Spotify via playlists from different sources.
    Would it be such a bad thing if the music industry income was spread around more to many more performers? Those many more performers will get less of a cut because, what was once profit on mega hits now needs to go back into A&R and new performers. The playing field is leveling. Sorry Kanye, et al.
    Right now, I am waiting for Apple’s presentation in June for Apple Music. When my Spotify trial is over, I will jump on the three months for Apple Music. Then, may the best service win. Right now, I think the only advantage Apple has is that, hopefully, my collection of 600 albums can be integrated seamlessly with playlists. If they do something smart like say, if a customer buys X number of downloads a year, streaming is free or discounted, that could be attractive too. If Apple Music accesses Spotify playlists a user has, that would be really great.
    But other than those things, Spotify is really good. Apple should have bought them!
    Oh, and if anyone charges more than $10 a month, I am out of any paid service. Even that is, frankly too high. Showtime, Netflix, etc. for all you can eat screen performance, sure. But for music? No. The value is not there. If you think it is, you have an over inflated view of musical recordings. Maybe this technological reset will help you understand.
    In 1984, typesetting was an ancient and honorable job involving skill, craft, art, and industry. Kind of like musical performance and recording. But digital post script fonts changed all that and within 5 years, most typesetting was done on a Mac. Old photo and early dedicated digital type setting gear and millions of lbs of lead type casting equipment was dumped (sadly). In 10 years, with digital layout direct to press, most typesetting companies, all Mac at that point, were closed. Designers just did it themselves.
    Typesetting survives but, now, it is only done with lead type as a fine craft in far fewer places. Beloved by many but, no longer a giant industry. In its place is a new form of the same brand names and a fantastic renaissance of type *design* the world has not seen since Guttenberg.
    All digital. All downloaded or rented!

    • Anonymous

      Thanks for the thoughtful comment. If you’ve got a few minutes, I’d love to get your answers to some questions to put some of the things you said in perspective:

      1. How much music do you listen to (just a guesstimate) on a weekly or monthly basis?

      2. Do you tend to listen to music as a primary activity, or more in the background (e.g., while you work)?

  4. ThePersonWhoIsntWrong

    Freemium is totally the only thing thats working. Fans of video games LOVE freemium models that have them paying hundreds of dollars to play shitty, cookie cutter games for more that 10 minutes.
    Also, that was sarcasm.