Spotify Inc (NYSE: SPOT) is witnessing a surge in its user base, but its paid subscribers growth lags behind free listeners.
In response, the music-streaming giant is exploring a move to put lyrics behind its paywall.
Recently, Spotify made headlines by restricting lyrics access to some non-paying users.
This alteration is currently in the testing phase, TechCrunch cites Spotify PR executive CJ Stanley.
While Spotify has advocated for its ad-supported free tier, it hasn't shown much attention to it lately. The last significant update to the free tier was back in 2018.
In its latest earnings report, Spotify announced a 34% increase in monthly users of its ad-supported tier, reaching 343 million. Paying monthly listeners also saw growth, but at a slower rate, up 17% to 220 million.
Despite its popularity, Spotify is not profitable, and its main competitor, Apple Inc (NASDAQ: AAPL), is the world's most valuable company.
Spotify needs to convert more free users into paying subscribers to boost revenue. In Q2 2023, Spotify reported over €2.7 billion in premium (paid-subscriber) revenue, compared to just €404 million in ad-supported revenue during the same period.
Spotify's other revenue-boosting initiatives in 2023 included hiking the prices for its premium plans in the U.S. and plans to add full-length music videos to its app, intensifying rivalry with Alphabet Inc's (NASDAQ: GOOG) (NASDAQ: GOOGL) YouTube and ByteDance Ltd's TikTok.
Price Action: SPOT shares traded lower by 0.51% at $158.50 premarket on the last check Wednesday.