🚀 Introduction

Spotify, a leading global music streaming service, provides access to a vast library of music, podcasts, and personalized playlists. Known for its cutting-edge recommendation algorithms and broad selection of content, Spotify tailors experiences that resonate with listeners worldwide. This engagement and retention project will center around the Spotify listener and not the artist, with a specific focus on Indian users.

India stands as Spotify’s second-largest market globally, 1st being USA and 3rd being Brazil. Globally, approximately 60% of Spotify's users are under 30 years old, while the 55+ age group represents the platform’s fastest-growing cohort, pointing to Spotify’s expanding reach across all ages. Unlike typical OTT platforms, Spotify's content enjoys a unique monetization advantage due to the long shelf life and high repeatability of music.

Indian smartphone users spend an average of around five hours per day on their devices, with over 20 hours per week spent towards music streaming. However, despite India contributing to roughly 15% of global streaming traffic, the country accounts for only 1% of paid audio subscribers, yielding an ARPU (Average Revenue Per User) of just around $3 USD—the lowest among major markets. This imbalance between free and paid users highlights a substantial opportunity for growth, both in terms of converting free users to premium subscribers and increasing ad revenue through Spotify’s ad-supported tier.

This project aims to help the reader gain a deeper understanding of spotify's Indian users’ core needs and behaviors, segmenting and targeting them to foster higher engagement and, ultimately, increase revenue. Additionally, it will examine the reasons behind user churn, with the goal of implementing targeted interventions to minimize drop-offs and boost retention

😍Core value prop of Spotify

Spotify's core value proposition centers on delivering a seamless, personalized and diverse audio streaming experience to all its users.

I know.. lets break it down.

🎵 📓 🎧 Diverse! - Extensive music and podcast library

Spotify is an audio content platform. Its core content is its extensive music and podcast library. Access to millions of songs across various genres and artists enabling users to discover and enjoy a wide range of music.

🧔 👱 🙍 Personalization

Spotify uses advanced algorithms to create playlists and recommendations tailored to each user's listening habits, which boosts engagement. Through extensive research, Spotify has developed a deep understanding of how to balance two important aspects of music discovery: exploration (where the user is unaware and trying to understand the outcome of consuming new content) and exploitation (where the user+algo is trying to leverage all known information to maximize the impact of consuming content). These algorithms are designed to meet user expectations by quickly learning how they respond to new music, while also leveraging familiar preferences to maximize the enjoyment and relevance of each recommendation. This careful balance keeps Spotify’s content both fresh and highly engaging for its users.

📱 🎧 🚗 🔈 Cross Platform availability

Compatibility with various devices and operating systems ensures users can enjoy their music and podcasts seemlessly across multiple platforms. On their phones, smart speakers, work computers, Smart watches, Android auto, apple carplay etc..

💰 / 🆓 To all its users - Accessible to everyone

A freemium model offers free, ad-supported streaming alongside premium subscriptions that provide ad-free listening, offline access, and higher quality audio.

❤️How do users experience the core value?

This could also be regarded as the reasons why a user chooses spotify as against competition. This section helps us confirm the core value prop and help us define our active user.

1. Personalization of music - The users journey starts with a small set of known artists but this world expands rapidly. Spotify has a pure discovery sections like weekly mix an daily mix for those who seek out new and fresh artists regularly but the extensive programmatic engine quickly gets to work by expanding users limited playlists with suggestions on similar songs. Curated editorial playlists also help user listen to music in specific genres or serves music in mood based selections based on time of day activity analysis. Eg: "Road Trip" playlists when android auto is connected, "beast mode workouts" for workouts, "Walk like a badass" for commutes and so on.
2. Access quality music from anywhere, anytime - Spotify works seamlessly on the computer, phone, smart speaker, car audio system etc. All methods of playback show up in the now playing screen on the app allowing the user to toggle between devices seamlessly. This compatibility boosts the user experience and improves chances of Spotify being the go to choice. Eg: Alexa smart speakers wouldn't work with YouTube music (No.1 music streaming app in India) but works great with Spotify)
3. Extensive music library - Users would find that almost every artist in every genre of music is available on spotify. This collection includes regional language music serving distinct linguistic and cultural backgrounds. Thanks to spotify's efficient data racking and extensive userbase in both the free and premium tier, music labels like SaReGaMa and TIPS work with them without a minimum payout requirement making regional music readily accessible on the platform.
4. Spotify makes sharing music with friends and family easy and engaging. Users can share tracks or playlists seamlessly across any channel of their choice, creating a traditional sharing experience that’s simple and intuitive. But Spotify goes beyond standard sharing options. With JAM sessions, users can invite friends to contribute to a shared playlist, where everyone listens to the same song simultaneously, creating a "private radio" experience. Another innovative feature is Blend, which lets multiple people join a programmatic playlist that merges their music tastes, crafting a selection of tracks tailored to everyone’s preferences. Together, these features transform sharing on Spotify into a collaborative and personalized experience, perfect for connecting through music.
5. Flexible subscription plans - Spotify understands the price sensitivity of Indian consumers and offers a tiered pricing approach to meet different needs. At the lower end is the "Mini" plan, which provides a one-week subscription with moderate audio quality and limited offline storage. For longer-term plans, Spotify unlocks all features, including high-quality streaming and increased offline storage. Other plans include Student, Single Premium, Duo (for two users), and Family (for up to six users). The Duo and Family plans effectively reduce the price per user, making premium features more accessible and affordable for households and shared users.

🤗Natural frequency - Spotify

Based on the typical usage patterns of spotify's users - i.e. the typical session length and the number of sessions they have in a given amount of time, the natural frequency of sportify is about 2 hours of listening time distributed over 2 or more sessions per day. For a typical users, Spotify is a everyday product.

Sub-products

Spotify does have a relatively new content category which is podcasts but this counts into the same session time and is primarily drives the same engagement metric as music collection does. over 30% of spotify's users are already engaging with podcasts and this is set to witness a healthy growth.

🏃‍♀️ Who is an Active User at Spotify

A user who had a total listening time (either music or podcasts) of 30 minutes to 1 hr distributed over 2 or more sessions in the last month.

This takes into account the background play time of the app. Unlike OTT the user need not have long SOT for Spotify.

For a paid user could qualify as an active user just by the nature of having an active premium subscription and renewing the subscription at the end of subscription cycle.

📚 Framework of engagement

Depth

Is the best engagement framework for Spotify. Depth is the function on both time spent on the platform and the number of sessions a user had on the platform. Both these factors greatly influence the core value prop user experienced. Fundamentally, users spend more time on Spotify only if they like what they are listening to on spotify. The content could be something they actively searched for (Thank you large library) or something that was suggested to them (Thank you Algo). A good session experience means the user is going to come back, thus , frequency. The more they come back, more likely they are to spend more this.

Depth of user engagement could be measured across multiple metrics some of which are shown below.

📈Metrics to track

Time X Frequency

Users need to get onto Spotify and spend more time

1. Total listening Time (TLT) - Indicating overall platform engagement
2. Avg LT - High level understand of individual engagement - potential to bucket into casual, core and power users
3. Session duration - an insight into frequency when combined with avg LT
4. MAU
5. DAU

CVP - diverse collection of music and podcasts

Users need to consume what they like the most

1. Completion rate - The percentage of tracks or podcasts played to completion. Reflecting content appeal and user satisfaction
2. Repeat plays - Strong indicator of musical preference

CVP - Discovery

Users need to discover more of what they like

1. Save/Add-to-playlist rates - Indicates they are finding the music they like
2. Skip rates - Tracks skipped shortly after being played. Flip side of save rates.

Maximizing CVP

Users need to use Spotify in more than one scenario

1. Time of day activity - understanding when users are more active enabling content scheduling based on likely activity
2. Podcast adoption rate - This could also be extended as podcast session time.

Now that we know what we are tracking and why we are tracking... lets find out who are we tracking

👥 Who are our users

Before we jump into what might be the most obvious way of segmentation for this product, lets understand three of our users and what music is for them, both in the past and today.

Two very different core/power users

👨🏾‍🦱 Prateek

Remember that guy in college who always raved about the cool new band 🤟 he'd discovered? It was all about the mind-blowing guitar licks 🎸, the insane drum solos 🥁, or the face-melting 😈 intros! That was Prateek—what a great guy! Generous too. He never hesitated to share his music with us. Thanks to him, I discovered Nirvana, Pantera, Audioslave, and so much more!

Prateek was young and energetic, more than willing to spend what little money he had on music. He couldn't wait to tell the world about his musical interests. For the most part, his music choices defined his identity.

👩🏾 Shruti

Music is everywhere, especially for Shruti. She has the perfect tune for every moment of the day. Growing up in the 90s, she cherished her cassette collection and absolutely loved her radio jockeys (RJs). When MTV and Channel V arrived, video jockeys (VJs) became her demigods! Shruti sees herself sailing through life's ups and downs with amazing background scores.

Today, her musical journey continues. She has mood-boosting playlists for her morning commute, pump-up tunes for workouts, and mellow tracks for evening wind-downs. Thanks to the magic of programmatic playlists, all the RJs and VJs she could ever want are working tirelessly to bring her the right tunes at the right time.

A casual User

👨🏾‍🦳 Sharat

Sharat loved music—when he did love music. Growing up in the 70s, music was closely tied to movies and drama. A great movie song would often get an encore in the theater, thanks to the enthusiastic "once more!" boys. Also, the annual Thyagaraja Utsavam in January or February attracted the best Carnatic talent from across his district.

Over time, the music industry changed dramatically, and Sharat embraced it all. Radio and vinyl gave way to cassettes, then CDs, MP3s, and finally digital streaming. Music itself evolved, with private labels and individual artists rivaling cinema music in popularity.

As these changes unfolded, work, responsibilities, and other distractions claimed most of Sharat's time. Today, with music and podcasts (the modern radio shows) just a tap away on his smartphone, he is rediscovering modern classics and long-format audio shows. Though not as engrossed as he'd like to be, Sharat still finds an hour or two on weekends to catch up on shows or unwind with music.

Lets Get into the details

Now that we know who we are segmenting, lets

🦸‍♂️|👩|💁‍♀️ Segment!

The casual users

Are the ones who probably fire up Spotify over the weekends when they dont have much to do. Their usage is intermittent and usually about 1 to 2 hours per week which is lower than the platform avg and well below our assumed natural frequency. They might be using is for some sort of background music or passive listening. These users might also be using the app for a specific reason like trying to find and listen to a specific or artist they are already aware of and not heavily inclined to discovery.

The core user

This one is on spotify probably every day. Much closer to the natural frequency of the product. The obviously have the app and music integrated into their daily routines throughout the day. They spend over 5 hours listening to something or the other on Spotify. Lot of their time is spent on programmatic playlists and artist radios. They love their mood based playlists because they know what kind of music they want to listen to and how they want to feel about that music but don’t exactly know the artists or the names. They also discover a lot of new artists regularly, thanks to the playlists, but are not particularly vocal about their listening choices. As long as they are personally satisfied by the service, they are happy.

The Power User

These super men and women absolutely love their Spotify accounts. It’s a part of their daily life and they use it for more than simple background play. They spend multiple hours daily on the platform and keep coming back to it to interact with the player. They are build playlists, adding songs to playlists, exploring new artist, checking and remembering the artist names, skipping songs and what not. These folks are a data galore for Spotify algorithm. The power users are also sharing their playlists with others. They are jumping into jam sessions and blends with their friends and family. Because of their deep investment into the platform, they use spotify on multiple devices (phone, computer, smart speakers, car etc). This power user could either be in the free tier where they have exhausted all their privileges for the day everyday or they could be a paying user.

A simplified secondary segmentation

Since Spotify CVP shines with a paid subscription, a segmentation on subscription plans could also be considered. Students like the one mentioned about in the ICP could either be on the free subscription or the student plan. Then there is the premium which gives all the benefits behind the paywall and this could be had either as an individual or, as a couple residing in the same household (ideally) or a larger family of 6. These multi user subscriptions reduce the per user cost drastically.

Now that we know whom we are targeting, lets take this knowledge to build out the How part of targeting.

*YOINK*

🏇🏾Off to the Races!

🚩 Campaign 1

🚩 Campaign 2

🚩 Campaign 3

🚩 Campaign 4

🚩 Campaign 5

Onto understanding retention and Churn..

🕉 Om Namo User aynamaha

Before we jump into the retention section, lets take a moment to appreciate the result of user centric and retention centric product development.

Spotify's journey began with its big "aha" moment: no-delay playback on desktop. This was groundbreaking in 2007, and users loved it. Spotify then set out to replace iPods and MP3 players by offering offline sync between users' phones and desktop playlists—a convenience unprecedented in the industry.

They soon realized not all users were music aficionados; many knew the type of music they wanted but not specific tracks. This insight led Spotify to acquire companies specializing in curated and programmatic playlists.

As they transitioned to a mobile-first world, Spotify noticed many users enjoyed shuffle-playing playlists. They negotiated with music labels to offer free shuffle play on mobile devices. Spotify then enhanced their recommendation engines and expanded to Smart speakers and beyond.

Throughout their evolution, Spotify consistently strived to be where their users wanted to go.

Thanks to this repeated user-centric innovation, Spotify now boasts over 551(potentially 650 by now) million monthly active users and more than 220 million subscribers. This represents a phenomenal conversion rate.

Market leader in India

Of the roughly 551 Mn MAU (This number could be as high as 650MN) about 170 to 200 Mn users are in the global east. We could consider about 120 to 150Mn for the Indian market as lion share of users from Spotify’s global east come from the India.

Within India, the conversion from free to paid users is lower than the global average driving the ARPU to below 4USD as against the global avg of over 4.7USD. But despite these lower conversions, Spotify captured over 26% of paid user market share for audio streaming and managed to emerge as the leading player in the country.

Based on these numbers, we can make some assumptions. If we consider a 20% dip in ARPU as indicative of a 20% dip in conversions, we might estimate that around 30 million of Spotify’s 150 million users in India are paid subscribers. However, this estimate is likely on the higher side, as ad revenue significantly influences ARPU in India due to the country-specific pricing strategies Spotify employs. A more conservative yet optimistic estimate suggests that Spotify has around 10 million or less paid subscribers in India. When Spotify eventually releases this data, it will be exciting to verify these projections.

Retention curve

With limited data availability for the Indian market, let's examine global trends (considering Latin America also shows similar patterns where customers are in a comparable economic stratum).

Spotify enjoys a much higher retention rate than its competitors. Users on the Duo plan retain the best, alongside Family subscription plan users. Single Premium and Student plan users churn the most, but their retention rate is still well above the market average.

Who is staying?

ICP 2 from my deep dive, Ms. Shruti, is the retention champion for Spotify, which is understandable. One obvious insight is that it's more difficult for a group of people to churn away at once compared to an individual. The resistance to leave is higher, as every party is invested at different depths in the platform. However, this logic doesn't directly extend to family plan users. This is probably because some household members are getting too little out of it, with a mix of cohorts (55+ and below 25). Some of these less engaged users might be turning into blockers, resulting in churn.

Retained users actively engage through social sharing options, making social media a retention-friendly channel for Spotify. This engagement extends to word-of-mouth marketing, primarily driven by playlist sharing.

Reasons for Churn 👋

Churn for Spotify might look slightly different from other platforms because of its free tier. Most of the ex-Spotify paid users I spoke with still have their accounts—they don't want to lose their data—but are now on the free tier. Of course, there will always be users who simply forgot about their account and moved on to other services. Now, let's explore the reasons.

Churn Campaigns

Campaign 1

Campaign 2

Campaign 3

Campaign 4

Campaign 5

--FIN--