In an effort to get more users hooked on their services, streaming platforms offered the Family Plan tier, allowing for multiple users on a single monthly bill and, while successful, such deals are now coming back to haunt streaming services in the form of reduced revenue.
Guest post by Bobby Owsinski of Music 3.0
At one point in time the Family Plan tier with multiple users on one monthly bill seemed like a great way to get more people on board with music streaming, especially when it was new. This strategy actually turned out to work too well though, as so many users are now on Family Plans that the average revenue per user has dropped even though streaming users have increased, according to an article in Billboard. A number of high-level streaming service execs are now worried that the plans may too generous.
It seems that nearly half the total worldwide streaming subscribers are now on family plans, each with an average of 3 to 4 subscribers (some plans allow up to 6 users). This mean that on average each user is paying just $3.75 instead of the normal $9.99 for a single user subscription. Spotify, Apple Music, Pandora, Amazon and YouTube all offer these plans.
Although Wall Street doesn’t seem too worried by the prospect, execs at the major labels and Spotify are beginning to wonder if the strategy is going to hurt the industry in the future. Spotify’s initial plan was $9.99 for the first user, and an additional $5 for each user thereafter. When Apple Music launched its family plan Spotify was forced to follow. Now both offer plans that include the initial bill-paying user and up to 5 additional “family members.”
Of course, you don’t exactly have to be part of a real family to make that work and that’s the problem, as many main users share a plan with their friends. The downside of that is that you’re at the mercy of the main account holder and if he or she doesn’t pay the bill or decides to change to a single premium account, you’re out of luck, but you’ll still enjoy listening for free in the meantime.
The family plan actually worked beautifully in achieving exactly what it was supposed to, and that was to introduce a lot of people to streaming music quickly. Don’t be surprised if the streaming platforms begin to reign the programs in a bit in the future though, starting with fewer members on an account.