Spotify Case Study
Spotify’s Current Position
Spotify had 220 million paid subscribers and 551 million monthly active users as of June 30th, 2023, the company announced in their latest earnings report (globally). Source: The Verge
Tasks
So, what’s the task that you and your team need to work towards? Let’s see.
As product managers at Spotify, your task is to:
- Increase paid subscribers from 220 million to 300 million in one year.
- Improve user growth in terms of Acquisition, Retention and at the same time, improve Engagement so that users get hooked to the app and spend more time that increases the chances of free users getting converted to paid and paid users to get retain.
My Solution:
Spotify’s Mission:
Our mission is to unlock the potential of human creativity — by giving a
million creative artists the opportunity to live off their art and billions
of fans the opportunity to enjoy and be inspired by it.
Spotify Me Plans:
User Personas for Spotify me:
- College Students 18–23 years of age
- Busy Working Professionals 23 to 50 yrs of age — who listen to songs and podcast during their travel.
- Above 50 yrs of age who aren’t tech savvy and listen to local language content only.
Problems with Subscription package for User Personas:
- Users have to pay for all contents (English, local language, podcasts etc) though the user might be using only one type of content.
- Music lovers, music professionals, hobbyist) have no special plans or
features catering to their interests. - Many users don’t need extra features like download the contents to devices option — would like to hear music online only.
User Segment to target:
User Persona 2 — Busy Working Professionals 23 to 50 yrs of age — who listen to songs and podcast during their travel.
This user segment has the highest potential for growth and engagement since they contribute to 35% of the total population and has more spending capacity of all personas.
User Analysis:
Spotify age demographics:
A majority of Spotify users are under 35 years old, but the average age has been increasing steadily over the years, as music streaming becomes the dominant listening format for all ages.
Spotify gender demographics:
Women make up 56% of Spotify’s usage in 2021
Spotify subscribers by region:
Spotify had 86 million subscribers in Europe and 62 million in North America, aligning
with the regional splits for users.
New User Acquisition:
Solutions:
We can introduce language specific packs:
Content Specific packs with lesser subscription prices:
- Regional language pack (songs and podcasts)
- English (songs and podcast)
- Songs and Podcasts(2 languages)
Pro: More subscribers willing to signup
Con: Existing subscribers downgrading leading to lesser revenue
Metrics:
- Overall number of subscribers on the platform
- Total subscription revenue in new model vs Total subscription revenue in old package
- Retention rate of specific pack subscribers
Streaming only Pack:
Acquire users who would listen to contents only when online and don’t opt to download the contents.
Metrics :
- Overall number of subscribers
- Total subscription revenue
- Retention of Streaming only pack users
Retention and Engagement of paid subscribers:
Engaging Music Professionals and hobbyist:
- Early access to new album releases from their 2 most favorite chosen musicians.
- Exclusive events for Spotify me Premium subscribers to music events
- Social Media for Music lovers in the Spotify Me platform — where users can share reviews of a song with their peer subscribers
- Jamming sessions in the platform for premium subscribers
- Discount coupons for music events happening in their locality for premium subscribers.
- Option to connect and interact with their music idols
- Option to purchase exclusive signed merchandise through the platform.
New features for Users:
Voice Search option
- Option to be a Spotify Creator similar to Instagram content creator.
- Chat option with friends and option to share short music reels over it
- Better recommendation algorithms using AI
- Music and Video reels — similar to instagram
- Karaoke option on the platform
- A feature that allows two or more users to listen to the same track simultaneously and in sync by creating a private channel. The channel can be made more engaging by enabling the users to interact on it with the help of a real-time chat. (Similar to Amazon Prime’s watch party)
- Ability for friends to add songs to the playlist — currently only one user can add songs to the playlist
- Feed of friends of what they are listening to visible to the user.
- Original contents in songs and podcasts.
Metrics:
- Average Number of hours of contents streamed per week per user
- Overall number of subscribers
- Total Subscription revenue
- ARPU — Avg Revenue Per User
Who Are We Competing With?
Competitor 1: Gaana
Strength:
- Home Grown — India’s largest online music streaming app hosts 30 million songs in 21 different languages.
- Wide reach and easy accessibility of various genre/artists/albums in one place
Weakness:
- Western music lovers have limited options.
- Unable to collaborate with friends to create a playlist — only one user can add songs in the same playlist.
Opportunities:
- Video Streaming: App has already experimented with video streaming which has proven to be successful. New concepts in this regard can prove to be beneficial for Gaana
- Partnership: Artist endorsement can prove to be key for expansion and
growth. Artists promoting the platform can ensure better revenue and user
engagement.
Threats:
- Rivals: JioSaavn, Amazon Prime Music, Youtube Music are tech giants and a big threat. Gaana should come up with effective strategies to cope with the rivals.
- Insufficient Revenue: The company isn’t profitable though it boasts of
largest number of user base.
