During yesterday's press event, Spotify Global Head of Creator Services Troy Carter was tasked with convincing a skeptical creator community that expanding the streamer's free music tier was good for them, even though ad supported streams pay far less than paid Premium plays.
Troy Carter's pitch is simple. More Spotify users means more music discovery, and that's good for artists and labels.
At the core of Carter's argument is this stat, shared yesterday: 71% of Spotify users are under 34 years old. Many of those younger music fans can't pay $9.99 per month (or the often lower local equivalent) to use a premium music service, the Spotify exec suggested during a press event on Tuesday.
But is that claim correct, or are Spotify and the music industry not doing enough to encourage them to pay?
A 2017 study by Charles Schwab showed that millennials spend more than other generations on "comforts and conveniences" like taxis, pricey coffee and dining out. 60% of millennials admit to spending more than $4 on a cup coffee, 79% eat out at full service restaurants regularly and 69% admit to buying clothes on a whim.
Even within the music industry, there are irrefutable signs that fans 34 and under are willing to pay up. The live concert business it thriving and ticket prices have never been higher.
I t's clear that a significant portion of Spotify's growth as a paid music service comes from those who tried its free tier first - the company hinted at strong conversion rates yesterday. But making its free tier more attractive, as Spotify did yesterday, runs the risk of giving users less reason to pull out their credit cards.
We May Learn More Next Week
With Spotify now a public company, we should be able to track if Spotify is doing something good for musicians and labels by expanding their free tier. In fact, we may learn more about Spotify's current conversation rates, along with the latest user trends, when the company reports Q1 earnings to Wall Street next week.
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