Spotify, long the leader in streaming music, has found itself in a precarious position: Analysts project it is about to lose the top spot. In February, a report by the Wall Street Journal revealed that while Spotify had 70 million subscribers to Apple Music’s 30 million (a stat last updated in September), Apple Music’s growth rate far surpassed Spotify’s—so much so that Apple Music was on pace to become the top music streaming service by summer’s end. It would seem that having its devices in the hands of consumers has been a huge boon to the adoption of Apple’s streaming service. But Spotify has been working on its own strategy for remaining on top. While Apple offers a free trial of Apple Music, its app is largely inaccessible without a paid subscription. With a free app, Spotify can give users a taste of the full premium app experience, a strategy that has been one of its primary means in acquiring new subscribers.
On Tuesday, Spotify introduced a new look and new features for the free version of its app. While the paid version offers a wide range of capabilities—playlist creation and curation, the ability to build and listen to artist or song radio stations, and the option to follow public playlists—the free app was more limited. Non-paying customers could do little more than listen to a selection of the app’s playlists on permanent shuffle mode. With Tuesday’s update, they gain access to 15 customized playlists. Before, they could only listen to whatever song Spotify’s algorithm happened to churn out next; now, they can listen to any song on that playlist whenever they like. These 15 playlists, which include the popular Discover Weekly, Release Radar, and Daily Mix playlists, are curated by Spotify based on your listening habits. They jointly contain more than 750 songs and are typically updated with new selections daily.
Spotify is also updating the onboarding experience for new free users, allowing them to select artists that they like so the app can start customizing playlists immediately. And for those who want to ensure they don’t bust through their monthly data plan in a day of frenzied streaming, there’s now a “data saver” option that minimizes the app’s impact on your usage. While the app’s premium version has seen numerous updates over the years, this is the free app’s first major overhaul since 2014, and it could prove an important update: Spotify’s free app is, for many, the gateway into a paid subscription. The free app currently has 90 million listeners, and according to the company, 60 percent of the company’s paying subscribers originated as users of the free version. By giving free users a bigger taste of what the premium Spotify experience offers—as well as a more prominently placed button to subscribe to the service in the bottom right of its navigation menu—Spotify likely hopes to boost its growth numbers and derail Apple’s march towards streaming music domination.
Spotify, which recently held its IPO and has yet to become profitable, needs this growth in order to succeed in the eyes of investors. Unfortunately, Apple has its one huge advantage: Its service is baked into iOS devices such as the iPhone X and iPad, and is integral to other audio-focused products like its wireless AirPods and HomePod smart speaker. For users just opting into streaming music options, the barrier to entry for Apple’s option is far lower than Spotify’s, which requires people to go into the App Store and download the app before they can test it out. On Android, the two services are on more equal footing—but the seriousness of Apple’s push into this space is evident by the fact that it even offers an Android app, a rarity for the company.
Apple may also have a leg up on Spotify with its free trial offer. Apple has a free three-month trial of its service, a bargain option that beats out Spotify’s 30-day trial offer.
While targeting free users is Spotify’s immediate play to boost its subscribership, in the long run, it could opt for a similar approach to Apple with a smart speaker of its own—a risky move that could pay off with increased users tuning in even more regularly than app users. But the market is already becoming crowded with a variety of options from Google, Amazon, and now Apple, among other companies. If Spotify doesn’t get into the hardware space itself, it could be wise to forge more dedicated partnerships with other speaker-makers in order to still grow its presence in homes and with families. In the meantime, the update to Spotify’s free app looks like a sure bet to boost subscriber numbers, and fight the growing threat from Apple Music, without putting the company’s bottom line or reputation at risk. Its free app is already working to lure users into its paid experience—this update aims to make that option even more appealing. It also makes clear the fight for streaming music dominance isn’t going to be over soon.