At around 65 million, Spotify has more monthly paying customers than any of its competitors by far. One of the reasons is that it was one of the first in the streaming music space, and another is that it has a fairly simple user interface. But the biggest reason by far is the fact that Spotify continues to make affordable deals with its main customer base, with the latest partnering with Hulu as a perfect example.
Spotify and Hulu are collaborating in a bundle aimed at students with a price of just $4.99. Considering that Spotify’s current student plan is already $4.99, this new deal where streaming video service Hulu is included will undoubtedly be very attractive to its prime target audience. What’s even better is that if you’re already a subscriber to Spotify’s student plan, you can activate Hulu retroactively.
As stated previously, this deal is one of the reasons why Spotify has the lead in the streaming music market and it user base continues to grow faster than the competition. The company makes it easy and inexpensive for music’s most avid consumers to become familiar with streaming, and it siphons off users from its main free competitor in YouTube at the same time. What’s more, music industry insiders have been saying for years that the ideal price point for a music subscription is $4.99 and that price will stimulate real growth in the space. Spotify has been offering its entry level paid subscription to students at this price for a while, and now with the Hulu deal it’s even more attractive.
This is a big deal because so far it seems that once a person commits to an online subscription to just about anything, it’s difficult for another company to pry that subscription away. Consumers make their decision and tend to stay with it. Suffice it to say that once a company gets you, it will probably take either some major mistreatment or a new technology innovation to wrest that subscription away.
There’s actually more to this Spotify/Hulu collaboration that meets the eye though. Spotify knows that it will eventually need to offer something unique and interesting video-wise if it wants to play in a bigger media sandbox. It’s currently burning through cash so there’s none available to invest in original programming anyway (although it does have plans for a few music-oriented shows), which requires much deeper pockets than the company has, or maybe ever will have. Having a partner like Hulu solves those issues though. That company will reportedly spend more than $2 billion in original content in 2017 alone, and if Spotify users have access to this scripted content through a bundle, it’s almost as good as coming from Spotify alone in terms of branding.
It’s a win for Hulu too. It gets access to current Spotify subscribers, and will be part of the online environment for prime demographic new subscribers that it might not have access to otherwise.
Meanwhile Apple is said to be investing in its own original video content, and it also has a $4.99 student program. It always feels like Apple Music is playing catch up and not innovating though, so the narrative is lead by Spotify, and that’s where all the attention gets focused. What’s a better story – Spotify and Hulu cutting a deal or Apple spending a vague amount of money on some vague future content? Of course, then Apple has a big iPhone event that makes you even forget that Apple Music exists.
I get it that Apple Music is a low priority for Apple and that it may even be a loss-leader of sorts. It certainly doesn’t have to stand on its own and will always be supported by super deep pockets in a way that virtually all other companies (save for Google and Amazon) can only envy. But Spotify has the lead in streaming subscribers by a large margin, and if things continue to play out as they are, it won’t be giving up that mantle any time soon.