Why Spotify Is Testing a Cheaper Subscription Option

A way to offer listeners more without charging too much

Key Takeaways

  • Spotify is testing a new "Plus" plan at a few different price points.
  • Spotify Plus comes with unlimited skips and the ability to listen to any song you want from albums and playlists.
  • Experts say the lower cost could entice new listeners who want access to Premium’s features without the full cost eating into their monthly budget.
The Spotify logo looming over an mp3 player and headphones

Reet Talreja / Unsplash

Spotify is testing a new ad-supported subscription with some extra features, and experts say it could help pull in new users who want premium features without the full cost of going ad-free.

As one of the biggest names in the music streaming game, Spotify has built a solid foundation on its free and paid plan options. Now, though, it’s testing a cheaper ad-supported subscription, too. Previously, Spotify only offered a free, ad-supported option, and a Premium version—which grants unlimited skips and other features. Spotify Plus will include some of these premium-only features, but still will be supported by ads. If Spotify can find a way to make this plan attractive to consumers, it could offer listeners more without costing them too much.

"Spotify’s move not only increases the company’s paying user base, but also helps expose users to the benefits of a paid subscription," Shahar Aizenberg, chief marketing officer at Artlist, told Lifewire in an email.

Casting a Net

Over the past year, Spotify has brought more content to its platform, especially in the form of exclusive content. A good example of this push is how Spotify has increased the amount of premium podcasts available on its service, including some with celebrities like Barack Obama, Joe Rogan, and more. 

All of this has been part of the streaming service’s plan to increase its user base. Spotify already services 345 million users, with 155 million of those subscribed to a paid Premium plan. 

Spotify on a MacBook

Pankaj Patel / Unsplash

But Spotify isn’t the only streaming option out there. It has to compete directly with companies like Apple and Google, who offer their own music streaming services in the form of Apple Music and YouTube Music. Amazon also has its own streaming service, meaning Spotify needs to find other ways to stand out.

Dangling some Premium features in front of its free listeners could be a good way to secure those users on Spotify, as it could add more value to the service for some.

Making the Catch

Of course, Spotify Plus isn’t guaranteed just yet. There’s a lot of data to capture in these tests—like whether or not users are fine paying a monthly subscription while still listening to ads. It’s also possible the current offerings could change as Spotify works to find a perfect price point. However, if it can manage to hook users with the lower-cost option, Spotify may be able to turn those middle-tier subscriptions into full-blown Premium subs in the future.

"The free version is very limited in its feature set, but the jump to $10/month for the luxury of Premium is either a cost or mental barrier for many," Mary Brown, digital marketing manager at Merchant Maverick, explained in an email.

Spotify’s move not only increases the company’s paying user base, but also helps expose users to the benefits of a paid subscription.

This also isn’t the first time we’ve seen a streaming service offer an ad-supported subscription. HBO Max features an ad-supported version, as does Hulu, and most recently, YouTube has started testing its own "lite" subscription. It makes perfect sense for Spotify to try to turn many of its free listeners into subscribers in some way. There’s also little risk that existing Premium users will drop to the Plus option if it does become widely available.

Brown, who has long been a subscriber to Spotify Premium, says Premium users are unlikely to downgrade because of the advertisements Spotify Plus will re-enable. She says most of the people who have Premium already most likely have it to avoid the annoying ads that play throughout a free user’s listening session. But that doesn’t mean there isn’t appeal for this cheaper ad-supported plan.

"If I were a brand new listener on the Free plan, a mid-tier plan could prove to be a stepping stone to upgrading to Premium," Brown noted.

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