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Why Spotify Sweetened Its Free Music Service

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Dec. 4 2020, Updated 10:53 a.m. ET

Data-saving feature of service improved

Spotify (SPOT) recently revamped its free service in a development that allows free subscribers to sample more music. With the revamp, Spotify is extending some features that were previously available to its premium subscribers to free subscribers, who form the bulk of its customer base. For example, Spotify’s free subscribers can now access more songs and even select songs from more than a dozen playlists.

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In addition to giving free subscribers greater access to its library, Spotify has also improved the data-saving capability of its free service, allowing subscribers to stream more songs while using less Internet data. This is a tweak that could appeal to customers in the developing world where Internet costs are still expensive for most consumers.

Spotify aiming for 200 million subscribers

As for Spotify, the revamp of the free service is part of its goal to drive subscriber growth. Spotify closed 2017 with 157.0 million subscribers, and it’s aiming to raise that number to 200.0 million subscribers by the end of 2018.

The competition is stiff

Spotify is in a competitive race against Apple, Pandora (P), Amazon (AMZN), and Alphabet’s (GOOGL) Google to dominate the market for streaming music. Apple is adding video to sweeten its music service, while Pandora recently moved to expand its availability by launching its premium music service on Microsoft’s (MSFT) Xbox One platform.

Google is working on rolling out a subscription music service, and it’s recently been linked to music licensing talks with Sony (SNE) and other music labels. Amazon, on the other hand, stirred competition in India’s digital music market after it followed Apple and Spotify to launch its streaming music service in the country in February. India is poised to have more than 270.0 million digital music consumers by 2020.

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