Spotify and other streaming services may face growing pressure to tighten account-sharing rules and raise prices, following a pattern established by Netflix. Goldman Sachs analysts say family plans attract more subscribers but generate less revenue per user than individual plans, suggesting that stricter eligibility rules could help music-streaming services capture more value.
Streaming services are tightening account policies
The pressure from Wall Street to enforce account policies has a familiar precedent. Streaming services often tolerate account sharing while they are focused on growth, then become less permissive after audiences are established. Netflix tweeted in March 2017 that “love is sharing passwords,” but launched its own account-sharing enforcement policy in May 2023.
Later that year, Netflix raised prices by up to 17%. By April 2024, the company had added 9.3 million subscribers and increased operating profit by 54%, in part as a result of the policy. Netflix is not alone: competitors including Max, now back on HBO, and Disney+/Hulu eventually introduced similar enforcement measures.
Family plans attract users but bring in less revenue
A Goldman Sachs report notes that family plans are more effective at attracting subscribers, but that “per-user monetization for these plans lags significantly behind individual plan pricing.” The report adds: “In our view, these plans offer a greater value proposition to consumers than the standard individual tier, and DSPs have been able to offer higher price increases and families without significantly impacting demand.”
The analysts believe streaming services have an opportunity to capture more value through stricter definitions and qualifications for family plans. In practical terms, that means services such as Spotify could enforce tougher account-sharing rules and raise prices while still increasing revenue.
What account checks could mean for users
When users try to load a playlist on a shared account, they may soon see a warning telling them to check with the plan manager. If the issue cannot be resolved within seven days, they may have to switch to another streaming service—or search their drawers for an old iPod.
Source: arstechnica.com