Spotify has been working to make playlists a more attractive aspect of the music streaming experience – and potentially to make them into a feature that can bring in more revenue. So far, the effort seems to be paying off.
According to co-founder and CEO Daniel Ek, the Sweden-headquartered music streaming service is now host to some 8 billion user-curated playlists, and of those, 725 million were created since the start of 2024 alone. That’s on top of the playlists created by Spotify itself.
“Fun fact: the country in the world that makes the most playlists per user is South Korea – 50% more than any other,” Ek wrote in a recent LinkedIn post.
And we can expect there to be many more playlists on Spotify in the future, as the company is now bringing AI technology to its playlist features.
In April, Spotify announced the beta launch of AI Playlist, a tool that allows subscribers to use text prompts to automatically create new playlists.
Beginning with iOS and Android users in the UK and Australia, subscribers will be able to type in prompts along the lines of “an indie folk playlist to give my brain a big warm hug,” “relaxing music to tide me over during allergy season,” or “a playlist that makes me feel like the main character,” and AI Playlist will spit out a list of suggested tracks.
Users will also be able to refine their results with additional prompts such as “more pop” or “less upbeat.”
What’s more, Spotify may be counting on the popularity of advanced playlisting to attract more users to its higher-tier subscriptions.
According to a report in Bloomberg in June, Spotify will be launching new playlisting features and song management tools as part of a pricier new tier that will include HiFi audio – a core ask of Spotify subscribers, and a long-awaited promise from the streaming service.
It’s not clear whether AI Playlist will be part of this new tier, which is expected to launch later this year, or whether Spotify has other playlist tricks up its sleeve.
What is clear is that Spotify has been working to add value to its paid subscriptions at a time when the streaming service (along with its competitors) has been raising prices – at least partly at the behest of music companies that have long argued music is underpriced in the consumer market.
After instituting its first-ever price hike in the summer of 2024 – which raised the price of a US individual Premium subscription from $9.99 per month to $10.99 – Spotify has continued the hikes, raising its US monthly individual Premium price to $11.99 this spring, and the the UK price for the equivalent tier to GBP £11.99.
On company earnings calls, Ek has said that Spotify has been shifting its focus from building a paying subscriber base to increasing margins in order to ensure profitability, something that, until recently, has eluded the streaming giant.
He has also said that, as the company raises prices, he wants to ensure that customers are getting additional value for that money.
To that end, Spotify has expanded in recent years from music to podcasts and audiobooks, which are now part of its Premium subscriptions. As of last fall, individual Premium plans come with 15 hours of audiobooks per month.
Spotify has also launched a standalone audiobook-only tier, at $9.99 per month in the US, and has also launched music-only tiers in the US and UK.
However, not all of Spotify’s moves to increase its margins through new and differentiated tiers have met with approval from the music industry.
US publishers and songwriters are up in arms over a decision this spring by Spotify to classify its default Premium subscription tier as a “bundle,” given that it now includes audiobooks. That’s because, under the US Copyright Royalty Board’s Phonorecords IV agreement, streaming services can pay lower mechanical royalties for bundled services than for standalone music services.
Spotify’s move has resulted in the Mechanical Licensing Collective (MLC) suing the streaming service in US federal court.
Among the MLC’s allegations are that Spotify’s new audiobooks-only tier isn’t what it claims to be, and actually offers access to music as well – at a lower price point than the traditional Premium tier.
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