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A break-even user is a low-risk opportunity to upsell in future and it’s the long term ability to starve your competitors of an audience. If Spotify cut-off ad-

A break-even user is a low-risk opportunity to upsell in future and it’s the long term ability to starve your competitors of an audience. If Spotify cut-off ad-supported users today, another service would scoop them up which poses a risk to Spotify: what if the competitor discovers how to convert those free users to paid? There’s complex dynamics at play when offering services to consumers that aren’t necessarily reflected in the numbers. For example, Netflix may believe they’ve reached a point where an advertisement-supported plan won’t cannibalise their higher value subscriptions and therefore now is the right time to do this when maybe it wasn’t right a few years ago. Consumer behaviour is constantly changing, companies have to keep up with it (and even anticipate it) lest they fall out of favour.

sorenjan 4y ago
I don't pretend to know anything about the intricacies of consumer behavior or service pricing, but I think it would be interesting to see what would happen with a different model. Instead of offering an ad supported free tier, you could have a free tier without ads, but other limitations like only shuffle, a time limit each day, no brand new releases, or similar. Then the no ads thing can be a benefit to other ad supported services, but if you want to listen to music all day you have to pay for premium. I'm sure smarter people than me have found this model worse than what's already used, I just hate ads and was surprised at the low value they seem to generate. And all those ad-supported users must generate plenty of streams that means payments to the record companies.
- super256 4y ago
  > but other limitations like only shuffle, They do this for free users on mobile.
scarface74 4y ago
Hulu makes more per user on their ad tier than their ad free tier. If their ad tied is successful, cannibalizing users isn’t a bad thing.

sorenjan 4y ago

I don't pretend to know anything about the intricacies of consumer behavior or service pricing, but I think it would be interesting to see what would happen with a different model. Instead of offering an ad supported free tier, you could have a free tier without ads, but other limitations like only shuffle, a time limit each day, no brand new releases, or similar. Then the no ads thing can be a benefit to other ad supported services, but if you want to listen to music all day you have to pay for premium. I'm sure smarter people than me have found this model worse than what's already used, I just hate ads and was surprised at the low value they seem to generate. And all those ad-supported users must generate plenty of streams that means payments to the record companies.

super256 4y ago
> but other limitations like only shuffle, They do this for free users on mobile.

scarface74 4y ago

Hulu makes more per user on their ad tier than their ad free tier. If their ad tied is successful, cannibalizing users isn’t a bad thing.