CIRP: Spotify’s high churn rate in the U.S. likely due to increased competition from Apple Music
It’s no secret that the streaming music industry has become incredibly competitive over recent years with the launch of Apple Music. A new report from Consumer Intelligence Research Partners (CIRP) analyzes Spotify’s Q2 2018 performance and the role Apple Music could have…
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CIRP explains that at of the end of Q2, 35 percent of Spotify users in the United States are on its Premium plan, with 55 percent of those subscribers having an Individual subscription, as opposed to a Family Plan.
The company goes on to note that 37 percent of Spotify users simply rely on the ad-supported tier of the service.
Further, 11 percent of ad supported Spotify listeners during Q2 converted to Premium subscribers, while 74 percent of trial Premium subscribers continued with their membership following the trial. Perhaps most notably, though, 16 percent of paid Premium subscribers cancelled their subscription and either reverted to ad-supported or moved to another streaming service.
- 11% of of Ad-Supported Spotify listeners began a trial Premium subscription
- 74% of trial Premium subscribers continue with a paid Premium subscription when a trial ends
- 16% of paid Premium subscribers ended a subscription, and either reverted to Ad-Supported Spotify or stopped using Spotify.
CIRP co-founder Mike Levin explains that this 16 percent churn rate among United States subscribers is higher than what Spotify estimates is the global rate. This, he says, is likely due to the highly competitive United States streaming market, with other services like Apple Music:
The monthly payment plan does allow Premium subscribers to cancel at any time, a situation that Spotify calls ‘churn’. We estimate a US churn rate of 16% for the quarter, higher than what Spotify suggests is the global rate. Again, we attribute this to a competitive US market, with many choices for paid and free streaming music services.”
Earlier this month, a report suggested that Apple Music had overtaken Spotify in terms of paying subscribers in the United States. Spotify, however, is expected to still have a lengthy lead globally.
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