A new consumer survey shows high interest in a possible high-end service tier at audio streamer Spotify Technology. But Spotify stock dropped on Friday along with the broader market.
A survey by KeyBanc Capital Markets showed that 45% of Spotify subscribers are interested in a higher-priced service level. That's up from 39% in the firm's fourth-quarter survey.
Spotify "super fans are super interested in a high-end tier," analyst Justin Patterson said in a client note late Thursday.
"While Spotify has not officially announced a higher-priced tier, comments from the company and labels suggest one is on the way," Patterson said. "The quarter-to-quarter uptick (in interest) coincides with this question expanding to highlight priority ticket access as part of the tier (a feature discussed in press reports). With Spotify already having agreements with two major labels (UMG and Warner), we suspect this tier could launch in second-half 2025."
KeyBanc surveyed 2,045 people in the U.S. on their audio habits for its first-quarter study.
The survey results also showed more interest in audiobooks on Spotify. Some 29% of users listened to audiobooks on the service in Q1, up from 25% in the fourth quarter.
"Net, we continue to view Spotify as being well positioned to achieve at least 15% annual revenue growth over the medium term, with potential to reach 20% growth if new initiatives and advertising ramp," Patterson said.
Patterson rates Spotify stock as overweight, or buy, with a price target of 675.
In midday trades on the stock market today, Spotify stock slid more than 1% to 568.70.
Spotify Stock Is On Tech Leaders List
The Q1 survey showed that 31% of respondents use Spotify. That compares with 22% for Pandora, 18% for Apple Music and 17% for Amazon Music.
Meanwhile, 37% of respondents said they listen to YouTube Music, but KeyBanc chalked up the higher number to confusion between YouTube and YouTube Music.
Among Spotify users, 48% use its free, ad-supported service. Further, 47% subscribe to a paid Spotify service. The remaining 5% weren't sure what Spotify service they used.
KeyBanc asked Spotify subscribers if they'd be willing to pay an additional $5 to $6 a month more for a "super fan" Spotify subscription with extra features. Those features could include enhanced music quality, AI playlist creation, early access to new music, artist Q&A sessions and priority access to concert tickets.
Some 45% said they were interested, 32% were not interested and the rest were undecided, KeyBanc said.
In the U.S., Spotify's standard ad-free subscription plan costs $11.99 a month for an individual, $16.99 for a two-person plan and $19.99 for a family plan. Spotify also offers a student plan for $5.99 a month.
Spotify stock is on the IBD Tech Leaders list.
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