As pressure mounts from Spotify’s competitors, the Swedish streaming music service is again enticing new users with a three month ad-free subscription for just $1. Revealed by Music Business Worldwide, the promotion is being dubbed a loss leader for the service, which makes the bulk of its revenue from paid streaming, as well as bringing in cash from its ad-supported free streaming tier. The news comes as Spotify prepares to compete against Apple’s soon-to-be-launched Beats-based music service, which is slated for arrival this June.
Spotify originally rolled out the promotion last year around Christmastime in the US, taking a loss in revenue for the three months with hopes of enticing users to stick to the subscription model once the trial is over. One can only assume the gamble proved successful, as the service is bringing it out again as pressure rises. New users in the US have the option to ‘try 3 months now for $0.99’ by subscribing to the service on its homepage.
Apple, meanwhile, has its own work cut out for it. The tech behemoth is reportedly prepping a subscription-only service, which will match Spotify’s paid tier at a price of $10/month. Behind the scenes, Apple has been gearing up for the war of the streamers, penning exclusive content deals with Florence and the Machine and more than a dozen other artists, making life difficult for Jay Z’s new music streaming platform Tidal, and hiring star English DJ Zane Lowe to join its team, presumably to help with music curation and creating taste-based channels.
Just today, news leaked that the Apple has been accused of pressuring music labels to remove content from Spotify. According to The Verge, Apple has been speaking with major labels to discourage them from renewing licenses for Spotify’s ad-funded tier. Apple’s strategies are getting so fierce that the Department of Justice is even looking into the legality of its practices. “All the way to Tim Cook, these guys are cutthroat,” said an unnamed music industry source to The Verge.
Apple isn’t the only company that wants to end Spotify’s free tier, though, and this promotion may show that Spotify is listening. As ad-supported streaming provides much lower royalties than paid subscriptions, major labels want to limit the amount of free music accessible on Spotify. And, unless you’re just tuning into the streaming music debate, you know that Taylor Swift doesn’t think very fondly of Spotify’s free tier, either.
Spotify currently boasts 45 million ad-supported users, alongside 15 million paying subscribers. Spotify Premium offers unlimited, ad-free listening, offline listening, and higher quality audio streaming than the ad-supported version.
While the service has plenty of assets on its side, including its free tier, experience, and brand-recognition in the streaming game on its side, Spotify has a tough road ahead if it wants to compete with Apple, and its near-unlimited resources. This promotion may be one of Spotify’s last pitches to convince new — and currently free — Spotify users to subscribe before they have the chance to check out Apple’s new service next month.
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