Spotify, the popular music streaming service, is introducing limitations on its free tier in India as part of its strategy to attract more paid users. The move comes two years after the company launched its service in the country.
Key Takeaway
Spotify has introduced limitations on its free tier in India, preventing users from manually ordering songs and performing certain playback actions. By aligning the Indian free tier with its offerings in other countries and enhancing the paid subscription experience, Spotify aims to increase its user base of paid subscribers. However, it remains to be seen how these restrictions will impact user behavior and whether users will opt for alternative streaming services.
New Restrictions on Free Tier
Under the new restrictions, free tier users in India will no longer have the ability to play songs in a manual order, rewind, scrub, or repeat songs. These limitations aim to align the Indian free tier with the offerings in other countries, such as Brazil.
Spotify identified India as one of its top five countries in terms of monthly active users. However, the market does not rank among the highest in terms of the ratio of subscribers to free users. Majority of Indian users opt for the ad-supported model.
In an effort to enhance the user experience for paid subscribers, Spotify is also launching a new feature called Smart Shuffle in India. This feature provides tailored song suggestions based on the user’s preferences and the song or playlist they are currently listening to. It was initially introduced for subscribers in March to help curate personalized playlists.
Potential Impact on the Market
Industry experts believe that Spotify’s decision to restrict the free tier could nudge users towards subscribing to the paid service. However, it remains to be seen whether these restrictions will lead users to choose alternative music streaming platforms.
Interestingly, other players in the Indian music streaming industry have already adopted a paid-only approach. Gaana, backed by Tencent, moved to a paid-only model last year. ByteDance-owned Resso also eliminated its free tier in India, Brazil, and Indonesia earlier this year. ByteDance subsequently launched TikTok Music in Brazil and Indonesia, discontinuing Resso in those markets. Notably, TikTok was banned in India along with several Chinese apps in 2020.
India currently does not rank among the top 10 markets in terms of music streaming subscriptions, according to a report by the International Federation of the Phonographic Industry (IFPI). Furthermore, a survey conducted by the Indian Music Industry, a non-profit organization representing music labels, revealed that the digital piracy rate in India stands at 73%, significantly higher than the global average of 30%.
Despite the competitive landscape, a report published by analytics firm Redseer in April highlighted Spotify’s popularity as the leading player in terms of the number of streams in India, excluding YouTube, which has over 450 million users in the country.
As of the quarter ending in June, Spotify boasted 220 million subscribers and recorded a growth rate of 17% year-on-year. The company recently announced its first price increase in the U.S., raising its monthly subscription fee from $9.99 to $10.99.
