Text | Music First, author | Li Qinyu, editor | Fan Zhihui has to pay to read the lyrics. Recently, more and more Spotify users have discovered that when accessing the lyrics function, a window will pop up to guide users to pay - "Enjoy lyrics on Spotify Premium (paid package)".

Text | Music First, Author | Li Qinyu, Editor | Fan Zhihui

You have to pay to read the lyrics.

Recently, more and more Spotify users have discovered that when accessing the lyrics function, a window will pop up to guide users to pay - "Enjoy lyrics on Spotify Premium (paid package)".

Unsurprisingly, this feature restriction has sparked outrage on social media around the world.

So, as a global streaming media giant, why does Spotify adopt such an unpleasant strategy now?

all for payment

's attempt to separate the lyrics viewing function from the free rights has been traceable since September last year.

In September 2023, some free users said that viewing lyrics was restricted. However, Spotify also told foreign media at that time that these changes were "just a test" and were carried out for a limited number of users.

But now Spotify’s actions have obviously exceeded the scope of “one test”.

Although there has been no official statement on the change, the company said in May this year that spotify's functionality may change over time, markets and devices. This response from also hints that the changes to the lyrics function may not be just a test, but that it is not yet ready to make a formal announcement on the affected markets.

But in fact, for users, Spotify’s attempt to increase the attractiveness of its paid subscriptions through the “lyric wall” is obviously not enough. After all, lyrics are still easily available on other platforms such as Genius, Apple’s Shazam or Musixmatch.

In addition to testing limits on lyrics, Spotify has explored a number of other ways to convert free users into paid subscribers. For example, in India, free users will no longer be able to manually set the order of song playback, or use functions such as rewind and loop playback.

According to people familiar with the matter, after a wave of price increases in July last year, Spotify plans to increase the price of Spotify's current paid packages by approximately US$1 to US$2 in five markets including the UK, Australia, and Pakistan this year.

During Spotify’s first quarter earnings call on April 23 this year, Spotify co-founder and CEO Daniel Ek also hinted that after the price increase plan is implemented, the company plans to launch a bundled subscription package for audiobooks and music. .

"We want to provide as much flexibility as possible in the next phase of Spotify as we become large enough to attract more consumers to move to paid subscription products."

This means, already subscribed to Spotify Premium with any of the premium plans Users only need to pay an extra $1-2 per month to listen to audiobooks, podcasts, and ad-free music.

But the change will create new problems for mechanical royalty distribution to songwriters and copyright agents.

When asked whether the increase in audiobook consumption would mean a reduction in music’s royalty share under Spotify’s royalty payment model, Spotify’s interim chief financial officer Ben Kung also said: “We have different content types for different content types. Cost model. We will use variable models for revenue sharing, such as single-user models, single-hour models, etc. We also have fixed cost models. Obviously this is a quite complex calculation mechanism that needs to be combined to achieve our best results. The advantage is that it balances profit and effect management through complex calculations to meet user needs to the best of its ability. "

Once upon a time, the app's product design guidelines were focused and concise, but for the ambitious Spotify, it seems that it would rather mobilize more complex operations. The methods and payment combinations must also improve their commercialization capabilities.

spotify is no longer just a music platform

It is not difficult to see that spotify has long positioned itself as a comprehensive entertainment platform, far beyond the scope of music streaming services.

Late last year, Spotify entered the audiobook space, offering its existing paid subscribers 15 hours of free listening time. In March this year, Spotify stated that since the launch of the audiobook bundle in the premium package, more than 25% of users have been using audiobooks, and the number of free users searching for and interacting with audiobook content every day has increased by 45%.Based on this,

also supports its launch of a $9.99 per month stand-alone audiobook package plan for free users. Listeners can enjoy more audiobooks on top of enjoying Spotify's ad-supported free music. And this pricing is only $1 lower than the premium membership that includes a bundled package, making it easier to arouse users’ curiosity and pursuit of cost-effectiveness.

This move is also an attempt by Spotify to attract more free users to upgrade their packages. While the initial rollout is limited to the United States, Spotify may expand the audiobook access package to other regions based on its performance and user acceptance.

Nowadays, the strategy of stripping out lyrics may also mean that Spotify will follow the independent audiobook package and launch a music-only package in the future. This also seems to mean that Spotify will conduct more refined operations on the types of content it provides in the development of content diversification.

In Spotify's latest financial report, the gross profit margin of its premium paid subscription business increased by 30.2% in the first quarter of 2024. In addition to several rounds of layoffs and cost reductions implemented last year, Spotify has long been highly regarded as a "two-sided market for artists and record companies. “Business has become the biggest contributor.

In Spotify's earnings call on April 23, CEO Daniel Ek said that the platform's podcast business will be close to breakeven in the fourth quarter of 2023, and he is confident that the full-year profit target for the podcast business can be achieved in 2024.

In the future, paid subscriber and revenue growth will no longer rely on the increase in the number of music listeners on the platform, but on increasing the number of consumers of other types of content. The different paid packages launched by for music, podcasts, and audiobooks are proof of this.

At the same time, spotify has indeed advanced to polygons.

Following the launch of audiobooks last year, in March this year, spotify announced that it would sell courses to users in the UK. British users can access four types of courses on Spotify from educational institutions such as BBC Maestro, Playvirtuoso, Skillshare and Themitific: Music Production, Creative Development, Learning Business and Healthy Living. Both free and subscribed users can try two lessons of each course for free before deciding whether to purchase.

daniel ek said that "Spotify is no longer just a one-size-fits-all solution, but a collaborative effort across multiple verticals to deliver consistent, exciting stories around more and more consumer choices, thereby driving more and more engagement." "

Interestingly, we also learned during the earnings call that we were asked whether the potential TikTok ban in the United States might create opportunities for Spotify to further enter the field of short video music. While Daniel Ek declined to discuss other companies' strategies or regulatory processes, he made it clear that Spotify views TikTok as a competitor as the short video platform has become a major focus for music discovery.

tiktok’s impact on spotify cannot be underestimated. On March 8, 2023, spotify announced that it would undergo the largest revision, in which the songs on the homepage will be presented in video form as a highlight.

With the support of the new function clips, musicians can add 30-second short videos to their introduction page and album page to share the story behind the song, promote the upcoming album, introduce collaborators or display new peripherals. These will appear as recommended content in the video feed on the homepage, attracting users to pay attention to the songs or musicians.

At the same time, Spotify also launched a new feature called "countdown pages", which allow musicians to promote upcoming albums through exclusive video clips, pre-save buttons and track list previews, and also provide a countdown to album release. Through the countdown page, fans who have pre-saved the album for release will be notified as soon as it is released.

In addition, in April this year, the Wall Street Journal reported that Spotify was developing some track changing functions similar to TikTok. Although spotify has been plagued by plagiarism controversies in its battle for dominance with tiktok, it can be regarded as having its own advantages through constant benchmarking. In contrast, Spotify's new features can open up new sources of income for artists. Audio created by users will be directly linked to the original audio.

It is understood that Spotify does not intend to allow these user-generated audios to be shared with third-party services. Instead, the company aims to make it easier for artists to receive royalties or other compensation for their work without having to release multiple versions of their music on the platform, and Spotify will likely include this content in its premium plan.

There are various signs that spotify is adjusting the balance between profit and experience based on the development of content diversification, and fully mobilizing member conversion through the comprehensive development of multiple business areas.

Conclusion

spotify is no longer satisfied with just providing music playback services. This has been doomed since the moment it proposed the "audio first" strategy as a way to differentiate itself.

From increasing membership fees to setting up different paid subscription combinations, spotify will surely rush all the way on the road to payment. The number of paying users that has not been affected by the price increase is also where Spotify's confidence in the global market lies.

Of course, this also means that the music streaming industry is maturing, and profitability has gradually become the most important indicator of survival in the industry.

Although many users are now discussing how to bypass payment and find a way to have both, or look for alternatives, in the fierce competition, Spotify has taken the lead in re-formulating payment rules, which is Spotify's way of expanding its territory. The screening of the basic market under ambition is also the confidence in one's own products.

In the future, various restricted conversion methods in order to increase user payment rates may be imitated by more music platforms and even Internet content giants.