Spotify Has a Higher Churn Rate in the United States Due to Increased Competition

New data shared by research firm Consumer Intelligence Research Partners compares the number of Spotify subscribers in the United States to that of the rest of the world. The data shows quite a big difference between choices made by consumers in the United States and the rest of the world.

In the United States, 35 percent of total Spotify subscribers have a premium account, with a churn rate of 16 percent. The churn rate means that while these users tried out the trial version of Spotify premium, they reverted to the ad-supported version at the end or stopped using the music service altogether.

CIRP data says that this churn rate is higher than Spotify’s global churn rate and attributes it to the heavy competition in the U.S. streaming market. However, its likely that its Apple Music which is the reason behind this high churn rate. Apart from Spotify and Apple Music, all other music streaming services in the United States are too small to cause a notable dent in Spotify’s churn rate.

We estimate a US churn rate of 16% for the quarter, higher than what Spotify suggests is the global rate. Again, we attribute this to a competitive US market, with many choices for paid and free streaming music services,” said Mike Levin, Partner and Co-founder of CIRP.

As for premium Spotify subscribers, 55 percent of Spotify’s subscribers have an individual account followed by 24 percent being on its family plan. 12 percent of its subscribers are on the Student plan with 9 percent having a monthly subscription that combines both Hulu and Spotify Premium.

The US is a competitive market, with a number of options for both free and paid streaming music. And, among these Premium subscribers, over half have the standard Individual membership, while one-quarter have the broader Family Plan, which offers multiple individual accounts for a single higher monthly fee. A significant percentage of Spotify customers have chosen these alternative subscription options.”

Spotify has been losing ground to Apple Music in the United States. While Apple does not offer a free version of its music streaming service, it does offer a three-month trial. Due to its higher growth rate, Apple Music has already surpassed Spotify in terms of total paid subscribers in the United States. The former is growing at a faster growth rate across the globe when compared to Spotify and it is only a matter of time before it overtakes it.