According to the news report by Bloomberg, Spotify Technology SA is planning an update for its free music service. This will be the first big product upgrade since the company launched its IPO last week.
According to people in the know who asked to be kept anonymous, Spotify is upgrading its free music service to make it more user friendly, especially for mobile phone users. An announcement about these upgrades is expected in the new few weeks.
The key metric that Spotify needs to fulfil to satisfy investors is user growth. This basically means that the newly public music company needs to attract larger numbers of new listeners, especially in its paid offerings. While the paid version of Spotify only accounts for less than 50% of the company’s user base, it contributed around 90% to the company’s revenue of €4.09 billion in 2017.
In 2017, Spotify had about 157 million active users, which includes the 71 million paid subscribers. This is the largest user base any online music service currently has. In fact, the growth in paid music streaming has boosted sales in the music industry for the last three years.
According to the anonymous sources, the new upgrades will allow listeners for the free service to access playlists faster. Free service listeners will also have more control over the kind of songs they can hear on the top playlists, which will actually mimic Spotify’s subscription product that features listening without being interrupted by ads. The subscription product currently start at a price of $9.99. According to the March forecast, Spotify is expected to reach 200 million subscribers by the end of 2018.
The music subscription segment is a growing and hotly contested market, with tech giants like Apple Inc., Alphabet Inc. and Amazon.com Inc. all contesting for a piece of the pie. Apple Music, the closest rival to Spotify has just about 36 million subscribers.
Despite its popularity, Spotify is not well liked by the music industry. Musicians and record label execs are criticizing the company for giving music away for free and are demanding that it limit what it makes available to non-paying customers. In fact, after a long negotiation, record labels were able to convince Spotify to let music artists delay the launch of their new songs on the free service.
Currently, the free music listeners cannot play every song in the Spotify library the way paying subscribers can, but they can listen to most of the major playlists as well as songs on shuffle.
However, this is the only concession that Spotify has given the music industry, stating that it still needs to compete with YouTube, the most popular video site in the world. The company still has not turned in a profit and states that it is focusing on growth rather than profitability at this stage of its evolution.
Spotify had invited members of the media to an event on April 24, where an announcement is scheduled. However, the company did not give any details about the announcement, which is why the industry is agog with curiosity about what the announcement could be.
Some in the industry are speculating that Spotify may be revealing a new speaker. The reason for this speculation is because the music streaming company has been hiring hardware specialists at a time when the other tech giants such as Amazon, Apple and Alphabet’s Google are launching their new smart home speaker systems. As a music streamer, it makes sense for the company to expand its product line to audio hardware.