![]() ![]() ![]() From a product perspective, while the launches of our Family Plan and our Student Plan have decreased Premium ARPU (as further described below) due to the lower price points per Premium Subscriber for these Premium pricing plans, each of these Plans has helped improve retention across the Premium Service. We have increased retention over time, as new features and functionality have led to increased User engagement and satisfaction. The rate of net growth in Premium Subscribers also is affected by our ability to retain our existing Premium Subscribers and the mix of subscription pricing plans. ![]() But at the same time, churn - a significant metric for subscription services that shows how many users are coming and going - is dropping each year and the number of hours users are listening are significantly increasing. Churn was 7.5% in 2015, and it’s down to 5.1% in 2017, content hours have more than doubled in that time from 5.4 billion hours to 11.4 billion hours. Spotify recognizes in the filing (“Family Plan” is mentioned nearly three dozen times) that this is partly due to the family plan. Spotify said its premium average revenue per user was around €5.24 in 2017, compared to €6.00 in 2016 and €7.06 in 2015. This means that even though Spotify is gathering more premium users, the actual revenue it generates from those users can drop over time.Īnd, indeed, that’s what’s happening, according to the filing. Spotify is also pointing to its student plan, which costs $4.99 a month, as another contributing factor to those pressures. The premium user consists of the one master premium account, which pays for the subscription, and up to five sub-accounts for family members. In the filing, Spotify indicates that the fee for a family plan - which costs $14.99 per month - can be actualized over as many as six accounts total (though it might not always be six). ![]() Spotify’s “Family Plan,” a variation of which launched in 2014, as well as its “Student Plan” appear to be driving a significant portion of the company’s growth and improving retention, as the company points to it multiple times in its filing for a direct listing on public markets today.īut that also comes at a cost of decreasing the amount of revenue it actually gets from each premium subscriber. ![]()
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