As part of their Q1 2019 earnings report, Spotify announced its user growth to 100 million paying subscribers - about 50% of all Spotify subscribers (premium and free). This past January, Apple announced its user growth to 50 million paying subscribers.
Spotify claims that a large portion of its new Premium subscribers is a result of its aggressive promotions, stating:
“Outperformance was driven by a better than plan promotion in the US and Canada and continued strong growth in Family Plan. We also saw strong growth from the expansion of our Google Home Mini promotion, as well as the price reduction to our Spotify Premium + Hulu offering in the US.”
As an Apple Music subscriber, I can only hope that this report will encourage Apple to introduce a services bundle for Apple Music, as well as its many upcoming services. Spotify’s double subscriber rate compared to Apple Music has shown how essential promotional deals and services bundles are to continued growth in music subscription services.
Music streaming is bland and non-unique. Aside from app UI, both Spotify and Apple Music offer essentially the same content at the same price. Any multi-billion dollar company can license music and sell a streaming subscription. So for Apple and Spotify, the question is how to win-over consumers to your brand as opposed to the alternative. That answer is television. Spotify’s offering of Hulu for no additional charge makes their brand literally more valuable than Apple Music’s offerings, despite both services being $10/month. Give ten dollars to Apple and you get music. Give that same ten dollars to Spotify and you get that same music plus a Hulu subscription. Luckily, Apple’s own video streaming service, Apple TV+, is coming this fall - hopefully in a bundle.
If Spotify and Apple Music both offer a bundled service of music and TV, the “identical service” issue will be gone. While they’d continue to offer generally an identical music service, they can differentiate their brand with the content of their video services. It’s here where Apple has the upper-hand. Apple is in complete control of its video offerings, while Spotify is simply partnering with an entirely different entity.
In the near future, I hope to choose my music subscription based on the bundled video service that best suits my interests. That being said, I wouldn’t be surprised if Apple never comes close to bundling its multitude of services.