How Spotify is capturing the interest of users by offering a smaller-priced package

For reasons unknown to me, I got to see this cover image in Kenyan Shilling currency in the Indian region.

Do my eyes trick me? No, it doesn’t. I recently landed in India and blasted Spotify while picking up the luggage and saw something fascinating. Spotify has enabled Premium Mini packs for developing economies like India. I never got to see that while I was abroad and it’s ingenuous of Spotify to make that shift for emerging economies and markets. Upon digging further, it came to my knowledge that Spotify enabled Premium Mini for the Indian region back in Dec 2020 during the peak of C-19. In this post, we’ll look at some reasons why Spotify and other international brands are making this critical move to capture some Asian markets quickly.

What is Spotify offering in India?

Spotify’s Premium Mini Daily Subscription Plan

• Spotify is offering a daily subscription for ₹7/day (0.09$) Beyond this, they are also offering a weekly plan for ₹25 (0.30$). These are both mobile-only plans.
• This is a similar plan structure as Netflix which offered ₹199/month (2.42$) mobile-only service to Indian customers. Disney+ Hotstar also does the same at ₹ 499/year (6.07$).
• To reach Indian users at an affordable price point, some of the features have been cornered off. It is mobile-only, and it allows users to download only 30 songs in total.
• After the success in India, Spotify launched similar Premium Mini plans in the Philippines and Kenya as well.

Why is Spotify so cheap in India?

The answer comes down to purchasing power and cost of living. As of June 2022, Spotify has over 433 million monthly active users, including 188 million paying subscribers.

Spotify’s key stats in a nutshell

I talked about Spotify’s total user base in detail in a separate article.

The Opportunity

In 2020, it was recorded that India had over 749 million internet users across the country. Any international brand can be successful if it can figure out how to capture a user base of this size. Although it is not that easy. A company like Spotify, they have an opportunity to surpass 1 bn active users if only they can make Indians convince to opt into their service.

Purchasing Power & Cost of Living

Unlike other developed countries, most Indians have a low purchasing power and hence, the ultimate cost of living in India is also low. The majority of the Indian population lives in villages without a stable supply of electricity and modern facilities. The number of people living in the cities doesn’t account for the majority, but they have access to the highest of facilities and are the predominant source of income for Internation brands like Starbucks and Spotify.

Because of the low purchasing power in India, the country was ranked to have the fifth lowest Internet data rates in the world (according to the latest Worldwide Mobile Data Pricing 2022 list). The survey of 233 countries found that the average price of 1GB of data in India is $0.17 (around ₹13.5).

The Capture

Past the above-mentioned points, Spotify is also facing stiff competition from companies like Gaana and JioSaavn. Both of these are Indian-origin companies that have similar offerings to Spotify.

Here are the plans that they are offering —

1. Gaana
   1 Month Gaana Plus — ₹99
   6 Months GaanaPlus — ₹249
   1 Year GaanaPlus — ₹299
2. JioSaavn
   1 Month — ₹99/Month
   1 Year — ₹399/Year

None of these companies are offering a daily or weekly plan. And Spotify’s daily plan is just ₹7. Although their monthly plan is ₹129, ₹30 (0.36$) is more than that of Gaana and JioSaavn.

The Pivot

Now as we have compared before when a customer visits Gaana and JioSaavn’s subscription plans, they’d instantly see higher pricing as compared to that of Spotify even though it’s not an apple-to-apple comparison. Yet, convincing a customer to spend ₹7 as compared to ₹99 is far more uncomplicated. And that’s what Spotify is targeting. If a customer pays ₹7 for 30 days, they will end up paying ₹210. Which is 2x more than what they would be paying to enjoy the services of Gaana or JioSaavn. But they are likely to capture a user’s attention by showing them single-digit pricing.

₹7/day is a small price for the Indian audience. The price point is positioned appropriately to tempt customers into subscribing to Spotify and giving them a taste of premium. Once a customer experiences a far-pleasing experience, they are bound to return after their subscription expires. And since they have experienced premium with only Spotify, they would likely turn a blind eye to the other products.

Here are Spotify Premium plans for different countries —

That’s the end of this short yet hopefully insightful read. Thanks for making it to the end. I hope you gained something from it.

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