Engagement & Retention project | Youtube Music

Why YouTube Music?

We can already listen to music on YouTube, so why do we need YouTube Music?

• Data Efficiency: Videos use much more data than audio streaming alone.
• Reliability: Audio quality on YouTube can vary, whereas YouTube Music provides high-quality, optimized audio streaming.
• Exclusive Content: Some artists reserve specific versions, like studio recordings, for streaming platforms only.
• CarPlay Compatibility: YouTube Music is optimized for CarPlay, making it accessible and user-friendly for in-car listening.

Core Value Proposition

YouTube Music offers a personalized, immersive music experience by merging the extensive variety of YouTube’s catalog with the ease of audio streaming. Users gain access to exclusive tracks, live performances, and any song version they desire—whether it’s a studio recording or a live rendition.

Product Background

What led to the creation of YouTube Music?

YouTube Music was developed to cater specifically to music listeners’ needs by offering a dedicated platform optimized for both audio and video. Recognizing that many users already turned to YouTube for music, YouTube Music was created to enhance this experience, addressing challenges such as data usage, audio quality, and accessibility on-the-go.

What differentiates YouTube Music from other streaming platforms?

YouTube Music integrates YouTube’s extensive video library with audio streaming, offering unique access to live performances, covers, and rare versions of songs. This blend of video and audio content provides users with a richer, more versatile music experience.

How is YouTube Music Doing?

YouTube Music continues to expand its market presence, holding approximately 10% of the global music streaming market. As of 2023, the platform has reached 80 million paying subscribers across YouTube Premium and YouTube Music, marking a 50% growth from the previous year. YouTube Music has seen notable growth in the U.S., Europe, and India, with its unique mix of video and audio content resonating particularly well with younger audiences.

User Experience

Users enjoy a dynamic and engaging app experience that includes a personalized home feed with recommendations, new content updates, and an array of features like offline mixtapes and playlist customization to enhance their connection with the music.

Core Value Proposition in Action

How do users currently experience the core value proposition?

• Personalized Mixes and Playlists: Daily and weekly mixes adapt to each user’s tastes, encouraging new discoveries and revisiting favorites.
• Curated Home Feed: The app’s home feed regularly updates with trending tracks, personalized recommendations, and exclusive content, ensuring a fresh experience.
• Video-to-Audio Flexibility: The seamless switch between video and audio modes enables users to access various song versions, including live performances, as audio-only.
• Radio Mix Feature: This AI-driven, endless playlist curates a personalized music stream based on users’ habits, evolving with their tastes over time.

Natural Frequency

To understand the natural frequency, we need to understand the types of users on YouTube Music:

• Casual Users: Users who listen occasionally, typically for specific songs or occasional discovery (2-3 times per month).
• Core Users: Users who engage regularly, using playlists and recommendations as part of their routine (6-8 times per month).
• Power Users: Highly engaged users who integrate YouTube Music into their daily lives, exploring features like Radio Mix, offline playback, and personalized playlists frequently (5+ times per week).

Ideal Engagement Framework for YouTube Music

The ideal engagement framework for YouTube Music is Depth

• Total Listening Time per Month: By increasing listening time, users are encouraged to explore more platform features, potentially leading to subscription conversions for ad-free listening and impacting revenue positively.
• Diversity of Content Consumed: Encouraging users to explore different tracks, genres, and playlists boosts retention, enhances platform loyalty, and provides a richer user experience, supporting engagement with premium features.

For YouTube Music, an active user is someone who returns to listen to music and engage with the unique features offered. The level of activity varies by user type as we discussed in the earlier section but here are more characteristics of types of users

We can go one step deeper and classify by subscription type (Freemium or Premium) and by their engagement level (Casual, Core, or Power)

Key Engagement & Retention Metrics for YouTube Music:

For YouTube Music, an Ideal Customer Profile (ICP) based segmentation provides a more focused understanding of user needs compared to other approaches. ICP segmentation considers a broader range of user characteristics, such as lifestyle, music preferences, feature usage, and engagement patterns. By defining ICPs, YouTube Music can more accurately identify what drives user satisfaction, retention, and premium conversions, tailoring its product experience to meet these specific needs.

There are several unique ICPs for YouTube Music, each representing distinct behaviors and values. While there are multiple user types on the platform, the following five ICPs capture the diversity within the YouTube Music user base:

• The Young Professional – A career-focused, tech-savvy individual who values personalization and convenience.
• The Family-Oriented Listener – A multitasking, family-centered user who seeks accessible music for various family settings.
• The Casual Discoverer – An occasional user who enjoys discovering trending tracks and exploring music without deep engagement.
• The Audiophile Enthusiast – A high-fidelity listener who prioritizes sound quality and exclusive, premium content.

For this analysis, let's focus on two primary ICPs: The Young Professional and The Family-Oriented Listener. These profiles reflect distinct usage patterns and feature preferences that align closely with YouTube Music’s core engagement and retention goals.

To go even deeper and understand all the metrics we can track to come up with effective engagement and retention strategies, we can further refine our understanding of user behavior by adding an extra layer into their engagement health. Here’s how advanced segmentation can help us come up with metrics and enhances the insights.

Now that we clearly understand our users and their in-app behaviors, we can implement the following framework to identify the key metrics to track

Validation of the segmentation:

The app reviews and Reddit research strongly support our user segmentation:

1. Frequent Mentions of Key Features: Users consistently highlight the value of offline playback, personalized playlists (like Daily Mix), and Radio Mix, confirming these features are crucial across user segments, especially for Power and Core users.
2. Differing Engagement Levels: Comments reveal that casual users primarily engage with trending playlists and specific tracks, while more engaged users frequently explore personalized recommendations and playlist creation, validating our Casual, Core, and Power segmentation.
3. Pain Points and Loyalty Indicators: Reviews indicate that users are loyal to YouTube Music for its unique library but note occasional issues with usability, reinforcing the importance of continuous engagement strategies for “In Danger” users.

These insights confirm that our segmentation reflects real user behaviors and feature preferences, providing a reliable foundation for targeted engagement.

Let's dive deep into each campaign listed above with a visuals:

To gain an in-depth understanding of retention rates, I examined industry-standard benchmarks for music streaming platforms. While exact percentages can vary, a reasonable estimate would be around 10% retention at M12 and approximately 50% at D30. By making some optimistic assumptions and adjusting for relevant factors, I was able to hypothesize the following retention data, which provides a realistic framework for analyzing YouTube Music’s user retention trends.

Sources: 1, 2

Retention Modelling - Sheet1.pdf

Google Sheets Link

Analysis:

M0 to M1

The retention rate shows a sharp decline from M0 to M1 for all segments, which is common in music streaming platforms as many new users drop off after the initial engagement.

ICP 2, in particular, has the steepest decline, indicating that these users (likely casual or freemium users) are more prone to churn early on. This could suggest that ICP 2 users may need targeted re-engagement strategies to maintain interest beyond the first month.

ICP 1 retains better than ICP 2 during this period, suggesting higher initial loyalty or interest among these users, possibly due to being more engaged or premium subscribers.

M1 to M6

The retention curve continues to slope downward, but the rate of decline slows for all segments.

ICP 1 consistently retains at a higher rate than the total user base and ICP 2, indicating a more loyal segment with higher engagement. This steady engagement might be attributed to ICP 1 users finding more value in YouTube Music’s features, such as personalized playlists or offline access.

ICP 2 retention continues to decline more rapidly than ICP 1, reflecting a need for improved user engagement tactics for this segment to prevent further drop-off.

M6 to M12

The retention rate begins to stabilize around M6, particularly for ICP 1, where the curve flattens out around 10-12%.

This plateau suggests that the users who remain after M6 are likely to continue using the platform, representing a core, loyal audience. For ICP 1, this loyalty might stem from premium features or regular engagement habits, whereas ICP 2 users who stay may still require some retention strategies to further solidify their usage.

Insights and Observations

• The data reveals that ICP 1 has consistently higher retention rates compared to ICP 2. This is likely due to lifestyle and behavioral factors—ICP 1 users may be more tech-savvy and likely to integrate streaming into their daily routines. Their familiarity with digital services and a preference for on-demand content aligns well with the features offered by YouTube Music.
• ICP 1 users could be drawn to the personalized, seamless experience that YouTube Music provides, making it a natural part of their lifestyle. This audience is likely to value features like offline playlists, personalized recommendations, and high-quality streaming, which cater to their consistent engagement with technology.

Which Acquisition Channels Drive Users That Retain Better?

• Organic Search and YouTube Integration: Users acquired through YouTube's main platform (organic discovery) and Google search tend to show higher retention. These channels attract users who are already familiar with YouTube's brand and may be seeking a dedicated music experience. This familiarity and interest in music content lead to better retention rates, as these users are more likely to see the unique value of YouTube Music.
• Paid Ads for Premium Features: Paid ads targeting tech-forward users with premium features like offline access and ad-free listening also show promise in attracting higher-retention users, particularly within ICP 1. By highlighting benefits that match ICP 1’s lifestyle needs, these ads drive better acquisition of users who are likely to engage more consistently.

What Sub-Features or Sub-Products Drive the Best Retention?

1. Personalized Playlists and Mixes: Features like Daily Mix and Discover Weekly are highly engaging, as they offer a personalized experience that evolves based on user preferences. This tailored content gives users a reason to keep returning, knowing they’ll find new music aligned with their tastes. Personalized playlists keep the platform fresh and engaging, encouraging repeated use.
2. Offline Access: Offline access is particularly valuable for users who want uninterrupted listening without relying on internet connectivity. The ability to download songs and playlists allows users to enjoy music on the go, making YouTube Music a convenient option. This feature appeals strongly to users who integrate music into their daily routines, driving long-term retention.
3. Radio Mix and Song Recommendations: Radio Mix, combined with personalized song recommendations, delivers an ongoing music discovery experience. The endless, curated stream of similar tracks allows users to explore new music while keeping within their preferred genres. This feature adds to YouTube Music’s stickiness, as users enjoy an engaging and evolving listening experience.
4. YouTube Premium Subscription: Users who subscribe to YouTube Premium, which includes free access to YouTube Music Premium, tend to have higher retention rates. YouTube Premium enhances the overall experience by removing ads and enabling background play across both YouTube and YouTube Music. This integration offers added value, as users benefit from ad-free, uninterrupted listening and video streaming. For users who are deeply embedded in the YouTube ecosystem, the seamless access between YouTube and YouTube Music makes it more appealing to stay engaged with the platform.

Source: 1 2

Churn:

To understand why users leave YouTube Music, it’s important to analyze both voluntary and involuntary churn.

Voluntary Churn Reasons (Users choose to leave):

Involuntary Churn Reasons (Unintentional loss of users):

Negative Actions to Monitor

To preemptively identify potential churn risks, the following negative actions can serve as red flags for potential churn:

• Low Net Promoter Score (NPS): Indicates users are unlikely to recommend YouTube Music, suggesting dissatisfaction.
• High Volume of Support Tickets: Frequent complaints, especially about billing or app performance, signal user frustration.
• Low Customer Satisfaction Score (CSAT): Points to poor user experience, often due to personalization or app performance issues.
• Decline in Login Frequency and Listening Time: Reduced usage suggests waning interest and potential churn risk.
• Low Engagement with Key Features: Minimal interaction with features like playlists or offline access could indicate a disconnect with user needs.
• Low Trial-to-Paid Conversion Rate: Users not converting after trials may not see enough value in the service.
• High App Uninstall Rates: Rising uninstalls indicate dissatisfaction, often from technical or usability issues.