To Combat Family Plan Subscriptions, Spotify Starts Testing ‘Premium Duo’

Will Premium Duo convince Spotify users to move away from heavily discounted family plans?  Probably not, but it’s a start.

Spotify Premium for Family hasn’t proven too fruitful for the company.  Not for its bottom line, at least.

In the company’s Q4 2018 financial report, average revenue per user (ARPU) fell 7%.  This marks the third consecutive quarter that ARPU has fallen, thanks in large part to discounted Premium for Family and Student plan subscriptions.

Breaking down the costs of 6 individual subscriptions, the company loses up to $44.95 a month on every Family plan.

So, to prevent some of the cash burn, Spotify implemented a controversial plan last summer.

Multiple users in four key markets, including the US and Germany, received GPS requests via e-mail.  To confirm their home addresses, the company requested a one-time verification of their home address with the following threat.

To continue using Spotify Premium for Family, you’ll need to confirm your home address.  If you don’t confirm, you may lose access to the plan.

Though the company quickly scrapped the verification following major blowback on social media, the move had seemingly worked.

According to Consumer Research Intelligence Partners (CIRP), the Family plan crackdown pushed up individual Premium subscription rates.

The research team noted,

Among these Premium subscribers, we’ve also seen an increasing percentage use Individual plans relative to June 2018 quarter.  Notably, later in the June 2018 quarter, Spotify reportedly began to verify that Family Plan members live in the same household.

“We’ve seen some preliminary data that suggests this tactic has indeed started to move Premium subscribers to Individual membership plans.

Now, in an effort to lure users away from these heavily discounted plans, Spotify has started testing a new feature.

Introducing Premium Duo.

According to a new report, Spotify has started testing Premium Duo overseas.

The plan allows two users to subscribe for just €12.49 a month ($14.03) instead of €14.99 ($16.84) for six.  If successful, Premium Duo would likely roll out in the US at $12.49 a month.

The new plan comes with a new playlist called Duo Mix.  This auto-generated playlist features music based on both users’ listening habits.  Duo Mix remains similar to Discover Weekly and Daily Mix playlists.

Like Family subscriptions, Premium Duo subscribers would have to live at the same address.  The user who foots the bill would first have to send their partner an invitation link to get started.


Featured image by Spotify.