The average Spotify subscriber in 2015 paid around €62.30 ($69.30) a year, or €5.20 ($5.78) a month, according to the company’s latest set of financials.
This figure is a low-end approximate, based on the number of subscribers Spotify had at the end of 2015 (28m) and the total amount of revenue brought in from premium accounts across the year (€1.74bn, or $1.94bn at current exchange rates.)
On the surface of it, a $5.78 monthly subscription average may seem like a disappointment to music rights-holders – especially those used to referring to Spotify’s $9.99/£9.99/€9.99 monthly subscription price.
But when you consider other factors, it’s perhaps more positive than it first appears.
In 2014 – at current exchange rates and on the same basis – the average Spotify subscriber paid €65.24 ($72.71) a year, or €5.44 ($6.06) per month.
Therefore, the value of an average Spotify subscription fell 4.5% from one year to the next – or $0.28 per person per month.
Considering Spotify uses a combination of telco bundles, territorially-sensitive prices and get-’em-cheap promotions to draw in new subscribers, labels may have feared a more dramatic drop.
Especially when you consider that the total number of subscribers from 2014’s year-end to 2015’s year-end grew 87% (up from 15m to 28m).
It’s also important to remember that 31.5% of Spotify’s official active user base (89m) were paying for the service at the end of last year.
That conversion rate was 6.5% higher than that seen in December 2014, when 15m subscribers were coughing up out of a total 60m active users – equating to just 25%.
So Spotify can point to both giant growth and significantly improved premium conversion to justify a relatively small drop in revenue-per-subscriber last year.
Is Daniel Ek fussed about trying to push up this average spend figure in 2016?
Not by the looks of things: Spotify has just started running a $0.99 for three months promotion to attract new subscribers in key territories (and a $9.99 for three months promotion to lure back lapsed subscribers).
That doesn’t mean ratcheting this revenue-per-subscriber figure wouldn’t be in Daniel Ek’s best interests, though.
Spotify posted a net loss of $194m last year, despite record revenues in excess of $2bn.
If it could have just pushed its average monthly subscriber spend up 10% – or $0.58 – to $6.36, Spotify would have been a profitable company in 2015.
Meanwhile, the average subscription spend across all global music services last year was significantly lower than Spotify’s – generating around $2.45 per month for music business rightsholders.
Food for thought.
