Engagement & Retention project | Accolite
Spotify
Music for everyone 🎶
Spotify is a music streaming app started in 2006 but entered India in February 2019 that gives a vast variety of songs, podcasts, and videos easily to anyone from anywhere to enjoy and be entertained.
Spotify users can access its services in many ways: through the app, web speaker, gaming console, smart speakers, smart TVs, wearable devices, etc.
Spotify has 2 types of users:
(i) Listeners—who consume content on the app
(ii) Creators—who create and upload their content for consumption, visibility and association with a global platform like Spotify
For this project, we will be focusing on the listeners, who are based in India and use the Spotify app.
Note: The majority of Spotify users fall in the 25-34 age bracket, with 18-34 being the largest percent of the user group, comprising a mix of millenials and Gen Z.
Gender distribution for the listeners of Spotify in India, with women taking a lead.
India ranks among the top five countries in terms of monthly active users on the service. However, it does not appear in the top markets when it comes to the ratio of paid subscribers to free users, as most users in India prefer the ad-supported model.
Spotify has grown to become the most-loved streaming audio platform in India, especially among Gen Z and millennials.
The figure shows a boom in the consumption of music from India worldwide, making it an exciting place to be for creators and also goes to show the music-loving preference of Indian audiences.
Market Research
India is now the world’s second-largest streaming market, surpassed only by the United States in terms of total on-demand streaming (audio and video).
Spotify leads the India market with approximately 3 million paid users. In comparison, Gaana has around 1.4 million paid users, Wynk Music holds about 500,000, and Apple Music has 200,000 paid users.
Subscription Models of popular music streaming services in India
Reliance JioSaavn
- Free Tier: Ad-supported
- Pro Plan: Rs 89/month
- JioTunes: Rs 49/month
- Pro Student: Rs 49/month
Spotify Premium
- Free Tier: Ad-supported
- Premium Individual: Rs 119/ 2 months
- Premium Family: Rs 179/ 2 months (up to 6 users)
- Premium Duo: Rs 149/ 2 months (2 users)
- Student Plan: Rs 59/ 2 months
Apple Music
- Premium Individual: Rs 119/ 2 months
- Premium Family: Rs 179/ 2 months (up to 6 users)
- Premium Duo: Rs 149/ 2 months (2 users)
- Student Plan: Rs 59/ 2 months
YT music
- Free Tier: Ad-supported
- Premium Individual: Rs 119/month
- Family Plan: Rs 179/month (up to 5 users)
- Student Plan: Rs 59/month
Prime Music
Included with Amazon Prime Membership (Rs 1499/year or Rs 179/month)
Gaana Plus
- 1 month: Rs 99
- 1 month trial: Rs 1
- 1 year: Rs 599
Only Spotify and JioSaavn offer ad-supported free listening/music streaming; all the others work exclusively on a subscription-based model.
Spotify has the highest number of paid users in India among all streaming services. It also has flexible subscription options, including daily, weekly, and family plans, catering to user preferences and budgets, as some people might not want to invest in a long-term subscription plan owing to the extremely price-sensitive Indian market. Also, the use cases can be different; for example, a person who usually doesn't listen to music might want a weekly subscription only for his 1-week trip, where he would actually have the time and would be actually able to enjoy ad-free music.
Core Value Proposition of Spotify
For music lovers and listeners who need vast variety and personalised recommendations, Spotify is a music streaming platform that lets you enjoy varied audio content instantly, anywhere, anytime, specially tailored for you
Personalised Recommendations: Spotify tailors its suggestions based on observing past user listening patterns, analyzing their preferences and giving personalized suggestions suited to their choice and interests
Vast Library: Offers a huge range of local and western music in different genres, including regional music, bollywood, indie, independent artists, EDM, hip-Hop, Folk music, audiobooks, and podcasts to cater to the diverse Indian user base
Social Sharing: Share playlists with friends; share their favorite songs on social media with friends/family.
User Experience
How do users experience the core value propositions:
- Daily mixes and Discover Weekly features on the app suggest music related to the users previous listening activity (also group them by mood, genre, and artists) along with adding some fresh music in sync with the listeners vibe to constantly keep evolving as the users listening preferences change, as well as exposing them to new music that's suited to their taste but they have never listened to before (via Discover Weekly). Sections like "Based on your recent listening", "Recents", "Your Top Mixes", "More of what you like", etc
- An intensive library of songs, artists, albums, podcasts, and audiobooks is available for users (even freemium users*) to explore and choose according to their mood, preference, region, or intent. The growing podcast user base also has various topics to choose from based on their interests, like education, mythology, storytelling, business, tech, etc
- Users can share songs on social media with Instagram stories. (It also may act as a way to connect with people with like-minded music interests.) They can also view friends activity: what they are currently listening to, which helps to create a community feeling amongst the users and acts as a nudge for them to explore new music by leveraging their FOMO.
Premium specific:
- Ads free music listening experience
- Ability to control the flow of songs on playlists without smart shuffle
- Download songs and listen offline without internet access, anywhere they want.
Possible use case:
(i) On a flight (usually shorter flights with no in-flight entertainment)
(ii) While hiking/trekking in a remote area
(iii) Not wanting to use mobile data (in public space)- uses wifi to download at home and listen outside later
(iv) Road trips (long highway stretches with inconsistent network connection)
Natural Frequency
The natural frequency of users experiencing this core value proposition varies significantly across casual, core, and power users:
The casual users use Spotify mostly when free, to pass time, or for specific events like when they are gymming or commuting.They use or for a shorter period and hence don't mind the ads often not willing to pay for going ad-free as their commitment to the platform is not so high. The core users use Spotify daily, maybe as part of a routine; they have a premium subscription and are more invested. The power users are brand evangelists who are deeply invested in the platform and use it every day multiple times a day, utilising various features like offline downloads, creating playlists, etc. They value the time and effort they invest (or have invested) in the app, and Spotify taps on this Ikea Effect to further retain them and increase their frequency of usage.
Casual | 2-3 times a week |
Core | Everyday |
Power | Multiple times a day |
Engagement Framework
The primary framework for Spotify would be depth, as the duration of the session for which they are listening is more important to better understand this. Let's take an example to understand this better and consider a case of extremeties to come up with a decision.
There are 2 Spotify users: Arjun and Rahul.
Arjun uses Spotify very frequently i.e opens the app multiples times to listen to audio content but the duration of his sessions is really low 5 min at max, Rahul on the other hand only uses Spotify 3 times a day(for sure), when he is gymming (at a streach for 2 hrs) and then when he communting back and forth during his car ride (cumulative time of 2 hrs). But he does this regularly everyday, it's like a habit for him. So even though Arjun's frequency might be much greater than Rahul but Rahul would be a more engaged user who maybe creates playlists in advance for his gym sessions, explores new music, has invested more time in the platform which increase his chances of retention in the long run as compafed to Arjun who is incosistent and is not investing time to actually experience the app or the features which are provided.
Breadth is also not a priority because the user may be exploring a lot of features within the app, but that doesn't necessarily mean that they are engaged; they might be just comparing features or trying to see what the platform has to offer, though this definitely shows an initial interest or recurrent interest in some cases, but until and unless the user is spending enough time on the platform to explore these features, they won't be actually engaged within the app.
Engagement Framework | Metric | |
|---|---|---|
Frequency | How frequently they listen (no. of times they listen) | Secondary |
Depth | Time spent listening per session | Primary |
Breadth | Additional features offered | X |
Active User for Spotify
An active user for spotify would be someone who comes back to the app to stream music/podcast atleast 4 times in a month for minimum 10 minutes
The reasoning for the above definition is that for any user to experience the core value proposition of the product and truly engage with it, they need to spend at least a quantifiable amount of time, which would indicate their ongoing interest and also give them the chance to truly experience the features. There might be people who would use Spotify only during weekends but consistently for longer periods, as compared to someone who uses Spotify for 3 hours in a session but eventually drops off.
Sub Products
The sub-products of Spotify are podcasts and audiobooks, with songs being there primary offering. The podcast listeners are increasing in India, with India becoming the third largest podcast listening market in the world after the US and China; hence, Spotify in 2024 wants to support podcasters and promote podcast content amongst the Indian audience, who is beginning to value the authenticity and realness of podcast setup. Spotify also offers both premium and subscription models. It is also now showing music videos to premium subscribers.
Understanding Retention
Bird's Eye View
Spotify boasts a remarkable user retention rate of 91%, significantly outperforming other streaming platforms by nearly 20 percentage points. Spotify's retention curve shows strong flattening dynamics, with the company retaining over 70% of users after the first 12 months
Spotify listeners are the least likely to cancel among the major video or audio streaming services in the US. In April, fewer than 1.5% of Spotify users canceled their subscriptions, maintaining an impressively low monthly churn rate of around 2%.
The increase in monthly active users in itself is not an all-encompassing metric for increased user retention but may indicate that more users are staying engaged within the app or that users are returning to the app frequently. Spotify primarily measures the stickiness of their service by calculating the ratio of Daily Active Users (DAU) to Monthly Active Users (MAU), essentially showing how many users are actively engaged on a daily basis compared to their total user base each month; a higher DAU/MAU ratio indicates greater user stickiness.
Microscopic View
Which ICPs drive best retention?
- Power users
- Core users
- Premium users on family or duo plans
- Daily listeners
- ICP 3
For the user segmentation by revenue, the duo subscription plan has the best retention amongst all available premium plans.
Which channels drive the best retention?
Word of Mouth (WOM) takes up the first spot for driving user retention, as according to user surveys and secondary research, users are influenced highly by their friends and family. Organic channels (organic content loop, Spotify Wrapped) drive user retention too by associating nostalgia and an overview of the user's journey, which they often feel like hearing on social media platforms, and drive retention as users value their memories associated with the service and become more loyal to the platform.
Which sub-featutres/sub-products drive the best retention?
Analysing user data from primary research podcasts was highly valued amongst working professionals as well as students for varying informational needs, due to the growing surge of hyperproductivity, hustle culture, and wellness-focused GenZ and Millennials and the increasing number of spiritually inclined users (owing to the ever-increasing stress in today's time). Blends also drive retention amongst Gen Z and younger populations as they value services that connect them with their social circle in innovative ways, thus increasing chances of retention. Spotify Wrapped is another huge contributor; according to stats, the social sharing aspect and the personalization, along with the feeling of having invested and being able to see your own music personality (via fun and gamified stats), urge users to keep using the service to be able to view and share their Spotify Wrapped every year.
Reasons for churn 😭
For Spotify, it is important to understand why users are churning to improve retention and mitigate the revenue impact of lost users, as well as to better optimize the platform based on churn user insights to reduce churn rate in the future.
Voluntary Churn
Reason for Churn | Explanation |
|---|---|
High cost of premium | Price-sensitive users hesitate to shift to premium because of high cost in comparison to services like YouTube Music, where the offerings are greater at lesser price |
Too many ads | Hugely distracting and irritating, with ads popping up every 15-30 minutes for a minimum of 30 seconds and can go upto 1 minute |
Less features offered in freemium version | YouTube music has a more comprehensive free version |
Smart shuffle, free version | The smart shuffle feature doesn't let the user control the sequence of the songs |
Personalised recommendations were not as great as YouTube Music | Sometimes the recommendations don't match what the users want |
Too familiar/used to existing platform | Users who might be using another platform and just trying out Spotify might be reluctant to switch as they have already invested their time and effort and have familiarity with the other platform. |
Lack of exclusive content | Other platforms, specifically YouTube, has unofficial mixes, longer playlists, live recordings, covers, lesser-known artists, and Instagram-famous audio content which is rarely available on Spotify |
User Experience | Too much clutter on the home screen, endless scrolling, plethora of playlists, inconsistent user experience and confusing user journey can cause churn |
Negative WOM | Hearing negative feedback or seeing a friend switch to another platform |
Unsatisfactory customer service | User issues are not resolved promptly or smoothly. It is a hassle to connect to customer care. |
Free version extensive restrictions | Timstamp-based sharing is not allowed in free version which the freemium platforms offer |
Limited regional content | Other services offer more variety of regional content |
Friends/peers/family on another platform | Feel FOMO and left out because they do not have the app for the songs shared by their friends or family who might be using another audio streaming platform and without having the app or premium version for that experience, it decreased the social sharing experience for that user |
Involuntary Churn
Reason for Churn | Explanantion |
|---|---|
Payment issues | Not able to process payment for subscription trial or premium subscription, declined payment |
Student plan validity | The validity for student plan got over and the user is no longer in college |
Breakup | Duo plan ended and didn't renew because of breakup with partner, as they do not want to share accounts |
Location change | Shifting to a new country which does not support Spotify |
Failed subscription renewal | The user subscription did not auto-renew and it was too much hassle for them to do it again |
App keeps crashing | Constant crashing of app made me uninstall it |
Negative actions to look for ❌
These negative actions help us to identify users who might potentially churn off based off their interactions with the service.
Negative Action | Potential Reason |
|---|---|
Decrease in premium feature usage | Less use of premium features like offline downloads, equaliser |
Decrease in listening time | Developed disinterest in the service, not being engaged enough or getting value out if the platform |
Increased number of song skips | Not happy with the suggested options |
Lessened or no social sharing | No excitement to share songs on spotify |
Visiting unsubscribe page | Shows inclination to discontinue the service |
Negative app store reviews | Disastisfied users, and as they have made the effort to communicate their dissatisfaction openly, they are at greater risk of being churned |
Discontinuing Premium Subscription | Not satisfied with the premium experience, hence downgraded |
Turning off app notifications | Irritated by the frequent notifications and consistent nudging, an indicator of reduced interest |
Change in user listening habits | Covering a weekly user from daily user or weekly to a monthly user potentially because of changed priorities, work schedule, less free time or not deruvubg enough value from the service to encourage the user to keep coming back frequently |
Low rating in In-app prompts for user experience | Indicates the user is unsatisfied |
Negative WOM | Through social media comments, comments on threads, and the Reddit community or on quora |
Decrease in number of new songs listened to | Can be indicator of reduced interest or user interests not being matched (music library or suggestions) |
Low CSAT/NPS | A low customer satisfaction score or net promoter score is a major giveaway of potential churn |
Resurrection Campaigns
Resurrection campaigns are aimed at users who have either churned or are on the verge of churning. The aim is to bring back churned users or re-engage users who will potentially churn soon.
For Spotify, a quote from the Q1 2020 shareholder letter states that
“Roughly 70% of churned users are back with Spotify within 45 days of leaving, which includes coming back through either our Premium or Ad Supported experience.”
Campaign 1
Churn Type | Voluntary |
|---|---|
Segment | Inactive premium users: decreased listening time and decrease in premium feature usage |
Campaign name | "Shuro karo Antakshari leke Spotify ka naam." |
Goal | Re-inforce the value of premium to inactive premium users at risk of churn |
Offer | Millenials feed on nostalgia, often finding comfort and peace in revisiting familiar childhood experiences |
Pitch/Content | Millenials feed on nostalgia, often finding comfort and belongingness in revisiting familiar childhood experiences. This need can be tapped on by introducing the "Revisit the Good Times with Spotify" campaign. Target "throwback playlists" and weekly challenges "Guess the 2000 hits" or "Bringing back the 90's magic." By participating in these biweekly challenges, the users will get their ranking on a leaderboard. Note: They have the option to create personalised friend/family lists and play with them or play with Spotify users on the public platform. |
Frequency and Timing | Bi weekly quizzes/challenges: in app notification Push notification: as reminder prompts to participate and relive childhood nostalgia once again |
Channel | In-app notifications, push notifications |
Success Metric | Number of users taking part in challenges Number of users checking leaderboards number of users creating private playing lists Week-on-week increase in time spent on platform |
Campaign 2
Churn Type | Voluntary |
|---|---|
Segment | Freemium users irritated with frequent ads |
Campaign name | Some Goodbyes Are Good: Breakup with Ads |
Goal | To make users experience unhindered listening and avoid churn, making them consider switching to premium instead by seeing the value in the service |
Offer | One month of free premium experience, discounted premium for first two months if they enroll for free now (creating FOMO and increasing chances of taking up free trials) |
Pitch/Content | Enjoy music like it's supposed to be experienced: without interruption, limitations, and ad-free. Join Premium now and start your 30-day free trial journey, because some goodbyes are good. "Why stay in a toxic relationship with ads when Premium is ready to treat you right? "In 2024, we are saying goodbye to toxic relationships, and ads are no exception" |
Frequency and Timing | In-app banner: Calling out last time to join free and avail 3 months at discounted price Push notifications to inactive users or who frequently shut down app after very short session time as soon as ads start playing, context-based frequency E-mails/not more than twice a week: To same users with better visual representation of premium benefits, since GenZ and Millenials comprise a huge user chunk, Modern dating lingo will appeal to them |
Channel | In-app notifications Push notifications |
Success Metric | Conversion rate to premium post trial end CTR rates on campaign notifications and email communication |
Campaign 3
Churn Type | Voluntary |
|---|---|
Segment | Students who downgraded from premium plan after trial period ended |
Campaign name | "Tera yaaar hu mai, we miss you." |
Goal | Bring back these users to premium. After the reduced price premium period ends and the students start working, they become hesitant to pay full price and hence stop using premium as they are still in an early career stage and price sensitive. |
Pitch/Content | Refer at least 6 friends to join Premium (it could be a student or individual plan) and get a yearly premium subscription at Rs xx/year, 25% lower than the actual price. Note: Since these users has just passed out of college, they would still be in contact with juniors who would be interested in joining the student plan (which comes at a significantly reduced rate), increasing the chances if them getting referee faster and motivating them to avail themselves of the offer |
Offer | Premium yearly subscription at reduced pricing called Premium-fix |
Frequency and timing | After the student premium trial ends and the user starts experiencing the blockers-filled free listening experience. |
Channel | In-app notification after trial ends with details of referral offer Push notifications to further remind the user to take action before the offer runs out |
Success Metric | Conversion rate from free (earlier student plan users) to premium plan (at reduced rate via referral campaign) |
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