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Insider: August 6, 2021 — Spotify tests cheaper plan, Follow-up to the New York Times, Miscellaneous Notes

Spotify testing low-cost plan. The plan — called Spotify Plus, because “Plus” is the nomenclature du jour — would still serve ads to the subscriber, but it will give them with more control over the listening experience, like being able to skip tracks without a per-hour limitation and the actual ability to choose the songs they want to hear.

Being a swaddled Spotify Premium subscriber for quite some time now, so I had missed the roll-out of the current iteration of the app’s free tier that took place in 2018. Among other characteristics, the free tier has a limited pool of songs for on-demand listening, users are limited to shuffling songs that are outside of that pool, and they can only skip six tracks per hour. Also, there’s advertising.

All of which is to say, that’s a lot of experience tax on the free tier, meant to push users down the conversion funnel into a Premium subscription. And there’s a lot of them: according to Spotify’s recent earnings report, the app currently has about 210 million ad-supported monthly active users, against 165 million premium subscribers.

But as much as an experience tax as there might be, the leap from Free to Premium — which primarily costs $9.99 per month, though there is a $4.99 per month Student Plan and discounts for bundles, and gives paid subscribers complete control over their consumption of available offerings without ads — is likely too steep for many, and the move to introduce a plan positioned in-between seems like a prudent enough move on paper. (Several observers have pointed out that Spotify’s push for a cheaper plan comes at around the same time that YouTube is testing a similar concept. A broader trend of restructuring subscription plan structures appears to be afoot.)

Some details of the Spotify Plus plan appear to be in flux. Some users have spotted the plan being test-marketed to them at $0.99 per month, though a spokesperson confirmed to The Verge that the company is actually experimenting with a few different price points. Should it ultimately work out to be $0.99 per month, that strikes me as a pretty comfortable threshold for lots of free users looking to greatly improve their experience. (I would not undervalue the ability to skip infinitely, even if there are still ads.)

But there are always downsides to consider. I thought Shira Ovide’s column over at the New York Times earlier this week threaded together the potential risks of reducing the simplicity of what’s on offer: on the one hand, lower-cost plans might attract users already paying full price, and on the other hand, an unnecessarily complicated or inadequately communicated pricing tier structure might simply cause analysis paralysis.

Moving on, there is also a larger question of how this shift in pricing structure — and what that shift indicates about the way the company thinks about advertising as an experience tax — relates to Spotify’s obvious intent to exponentially grow its podcast advertising business, the potential complications of which I wrote about last week.

I don’t have any particular novel insight into how the company is thinking about this, but here’s a way I could think about the longer-term strategy: build a payment tier that normalizes advertising within its context, so you can lay the foundations for further growing the podcast advertising load on the platform.

Follow-up to the New York Times. First of all, a slight adjustment to the item from Tuesday, in that I added some additional detail to the blurb after getting more information. The pertinent paragraph, on the new structure of the Audio division, now reads:

In the Director of Audio role, Szuchman will work with Lisa Tobin — the Times’ first executive-level hire on the audio front — who will continue to be responsible for news and enterprise pieces, and with Alison Bruzek, a senior producer on Opinion Audio who will step into an interim leadership role in that team. The search for a new head of Opinion Audio is currently underway. The Daily, which seems to be carved out as its own team within the News Audio division, will continue to be run and edited by Lisa Chow. Operations for both News Audio and Opinion Audio will remain separate, mirroring the conventions of the broader newsroom, but Szuchman will be the overall manager of both in this new structure.

Meanwhile, Serial Productions, which the Times acquired last summer, will continue operating on its own under Julie Snyder’s leadership, and will report directly up to Times assistant managing editor Sam Dolnick. It’s my understanding that Serial Productions will not be part of Szuchman’s purview.

Moving on, the company announced earnings this week, and one audio-related data point to clock: digital advertising revenue for the quarter grew by 66.4% year-over-year, attributed in part to the advertising business’ cratering in Q2 2020’s early pandemic phase, but also cited were gains in direct-sold advertising in general, which includes traditional display ads and podcast ads.

Another thing to note. Given the Times’ general push towards being a subscription-first business (increasingly complemented by a growing audio ad business, of course), the bigger picture story about the company seems to be captured in this line with the earnings release: “Of the 142,000 total net additions” — of paid subscribers — “77,000 came from the Company’s digital news product, while 65,000 came from the Company’s Cooking, Games and Audm products.”

Audm, of course, is the text-to-speech/narrated audio service that the Times acquired in March 2020. Two thoughts about this. Firstly, it strikes me that write-ups on the Times’ earnings seem to allocate Audm as a “non-news” service, which I’m not entirely sure about. Presentation of news is still news, IMHO. Secondly, I’m going to guess that Cooking probably drives the lion’s share of these new non-news subs, but still I’m plenty curious as to how Audm’s doing as part of this mix.

Miscellaneous Notes.

New Hampshire Public Radio has recognized the station’s union represented by SAG-AFTRA, Current reports. The collective bargaining process comes next. Stuff might be getting sticky over at the Writer’s Guild of America, East, but SAG-AFTRA, which drives a lot of the organizing in public radio, continues apace.

SiriusXM is creating a pop-up station for Lucille Ball’s old interviews that she did for her ten-minute daily CBS Radio program, Let’s Talk to Lucy, which it will then distribute as a podcast after the pop-up run is done. The Los Angeles Times with the write-up.

iHeartMedia is partnering with NRJ Group, a radio-centric French multimedia group, to “develop, translate, distribute, and monetize” podcasts in France.