Spotify discount subscriptions - Spotify respond. Sort of.
Yesterday we revealed some users of Spotify had received invites to subscribe to their Premium Service at a heavily discounted rate. The offer was presented as a promotion in conjunction with Swiftcover. We highlighted the promotion because it doesn't make a lick of sense - offering discount subscriptions so early in a product's life only serves to devalue it, and potentially upsets those loyal early adopters who are paying full price.
We then discovered from Bitterwallet readers that Spotify were offering different users different amounts of discount - anywhere from 10 per cent to a whopping 50 per cent off for six months, seemingly without rhyme or reason:
The biggest mystery is the level at which the client Swiftcover is exposed to users. It isn't. Beyond the initial email which barely mentions Swiftcover in passing (the email doesn't even feature their logo, nor is their name even hyper-linked to their site), the client has nothing to do with the promotion; they're not mentioned again when you click through the link, and since Spotify Premium promises an ad-free experience, what exactly are Swiftcover getting for their money?
We decided to ask Spotify four reasonably straight forward questions about the activity:
- how have registered users been chosen to be eligible for this promotion?
- why is there such a huge discrepancy in the discounts offered - between 10% and 50%?
- is there a concern that Premium users who have recently subscribed will stop subscribing?
- is Spotify using this activity to test different price points for its Premium service?
We weren't expecting a straight forward answer to the last question, but a reasonably adept PR person could have seen off the first three with ease. Questions from the media about promotional activity shouldn't come as a surprise, especially for a company as high profile as Spotify. And yet:
We run a variety of different promotions with various partners and this is an example of one of them that has a Swiftcover sponsorship.
Wow. Spotify aren't prepared to explain anything concerning this promotion. No detail whatsoever, not even an attempt to point out the benefits to basic users, nothing. In fact we're quite taken back by this circular statement of non-substance.
The basic principle of any client-sponsored promotion is that the client benefits from direct exposure to potential customers; beyond two mentions in an email, Swiftcover gain nothing from this activity. They can't possibly be underwriting the subscription discounts to the tune of tens of thousands of pounds, because they're getting nothing back. If they're receiving airtime in return, then this promotional activity becomes nothing more than added value - Swiftcover are receiving a trickle of extra awareness on the back of a promotion Spotify were intending to run. You don't charge a client for advertising and then run a loss-leading promotion for them out of kindness.
So are Spotify testing the waters to see what subscription rate is most appealing to users? Are they trying to convert a percentage of the massive number of basic users to the Premium service to pump up their revenue? Either is a far more plausible explanation of Spotify's motives than this diluted shambles of a client-led promotion, though the end result is the same - none of this looks good for Spotify, and it does nothing to increase the perceived value of the service to new customers.