![]() ![]() Spotify and other services see family plans and other discounts as a way to solve an even bigger problem: churn, or the percentage of subscribers who leave a service within a given period. Spotify & Fellow Streamers Soared in 2020, But Expect Growth to Slow ![]() (Amounts differ by country.) That makes average revenue decline because that payment is split among more users. Spotify says the leading factor in ARPU erosion is its family plan, which allows up to six members of a household to use one account for $14.99 in the United States. What some creators see as bad news, however, might be good for Spotify - and, perhaps eventually, those creators as well. When Spotify makes less per user, of course, so do creators. That number is down 39.4% since 2015, when it was $8.66 due to a number of factors, including expansion in countries with lower prices, telecom bundling, student deals and family plans. In 2020, Spotify’s global ARPU was $5.25 a month, of which it paid out about $3.90 a month to rights holders. That number is the average revenue per user, or ARPU, and it’s closely watched because of its direct relationship to royalties, which many creators wish were higher. ![]() They’re less focused on how many subscribers a music service has than on how much money it takes in from each. On the same call, CFO Paul Vogel said, “For us, it has historically been about really thinking about growing users and subscribers first before worrying about the monetization part.” The company’s strategy has always been that growth comes before everything else - to the occasional frustration of creators, who are sometimes more interested in today’s royalty payouts than tomorrow’s valuation. At Spotify, “Our continued focus is on reaching more listeners, as ultimately this will translate into long-term value for our investors,” said CEO Daniel Ek on an October 2020 earnings call. ![]()
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