Spotify got a million Indians to try its app in a week — but they will only stay if the price is right
- Spotify has managed to reign in a million users within one week of its launch in India.
- One of the reasons could be the localisation of Spotify’s premium subscription model.
- Looking at how other brands have localised their pricing for India also sheds some light onto Spotify’s success.
It’s not just about how Spotify’s subscription plans stack up against its music-streaming competitors like JioSaavn and Gaana but about how Spotify has localised its pricing model to India’s users.
In the United States, a Spotify costs $9.99 (₹700) per month but in the India the monthly subscription cost is only ₹119 — that’s 80% cheaper than its price in the US. In both cases, you do get a 30-day trial to figure out whether or not it’s worth the money.
One theory is that Spotify charges only what a market can bear by prices set according to each country’s per capita gross domestic product (GDP).
While in the US the monthly subscription cost for Netflix is $7.99 (₹561), the same subscription is only marginally cheaper in India at ₹500. Taking the library size into consideration, that does make India the third most cost effective in terms of cost-per-title among countries where the video streaming service is available according to a report by Comparitech.
But, in terms of being cheap in absolute value, India is only 17.7% percent cheaper than the average cost of monthly Netflix subscription around the world — ranking it seventh below Brazil, Colombia and even Canada.
Even so, Netflix has reiterated that it has no plans to lower prices in India in any of its three subscription models — basic, standard and premium.
"We see the typical mix across these three plans that we see in many other countries like the U.S., which would indicate that we don't have a pricing issue. Because if it was, everyone would be on the lower price plan."
Amazon, on the other hand, has done a better job of toning down its prices for India. In fact, India has the cheapest Amazon Prime subscription in the world at ₹129 per month, which is 73% cheaper than the average monthly subscription rate.
But, the US and the UK still get a better bang for their buck because their video library is considerably larger.
Either way, the pricing strategy works for them since they have reported 10 million prime users in India as of last year — despite all the ‘shared accounts’.
Even Apple Music has moderated its prices for India where it only costs ₹120 per month locally whereas an individual subscription plan in the United States would cost $9.99 (₹700).
This is an exception for the company notoriously known for being steadfast in not lowering the price of iPhones in emerging markets where it's losing its market share to Chinese competitors like Xiaomi and Huawei.
Spotify still have tough road ahead of them. According to a joint report by Deloitte and the Indian Music Industry (IMI) India has around 150 million paid users of music streaming services. And, as of August, Gaana had 75 million users.
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