As Spotify readies $18 per month ‘deluxe’ tier, do consumers care about high quality audio?

Spotify has long faced criticism for its lack of high-fidelity audio.

One of the company’s staunchest critics of its audio quality is Neil Young, who, in March, when he announced his music was returning to Spotify after two years, called the platform the “#1 streamer of low-res music in the world.”

In a now largely homogenized streaming landscape, where platforms look similar and offer the same catalogs, the availability of HiFi audio has been a key differentiating feature at Spotify’s larger rivals.

Apple Music, for example rolled out Lossless Audio and Spatial Audio with support for Dolby Atmos to its service for free in May 2021.

That same month, Amazon Music also launched HD music listening options for its then-$9.99-per-month Music Unlimited Service “at No Extra Cost”.

To be fair to Spotify, it did actually announce a few months before those two rivals (at the start of 2021) that it was planning to launch HiFi music streaming on its platform.

Yet although SPOT said at the time that HiFi audio was “consistently one of the most requested new features by our users,” the feature has just never arrived.

That could change very soon, however. CEO Daniel Ek confirmed during the streamer’s earnings call last Tuesday that it’s working on a new $17/$18-per-month ‘super-premium’ – or in Ek’s words – “deluxe” tier.

He stopped short of providing exact details of what it includes, but it’s rumored that ‘superfan’ content and HiFi audio will be key features.

The move will be welcomed by rightsholders looking to extract more revenues from subscription music streaming. Universal Music Group CFO and President of Operations Boyd Muir told analysts on UMG’s earnings call last week that “as many as 20% of the current subscriber base could upgrade to a super-premium tier at a meaningfully higher price point for a compelling product configuration”.

The introduction of HiFi audio as part of the deluxe tier will also please audiophiles like Neil Young, who for years have urged Spotify to join the HiFi party.

But as SPOT prepares to roll out its potentially high-fidelity audio-enabled ‘deluxe’ tier, new stats published last week appear to indicate a waning interest in HiFi audio over the past four years.

According to Luminate’s Midyear 2024 report, which you can read here, high-quality audio (including HiFi, lossless etc.) is becoming less of a priority for paid music streamers in the US.

Citing its US Music 360 survey for H1 2024, Luminate reports that in 2024, 31% of paid music streamers in the US stated that high-quality audio is a priority amongst users considering switching or trying a new service in the next 6 months. Luminate calls these users ‘Up-For-Grabs Paid Music Streamers’.

In 2023, according to Luminate’s report,  34% of paid music streamers stated that high-quality audio is a priority. In 2022, it was 36%, and 37% in 2021.

As you can see from Luminate’s chart below, ‘exclusive artist content’ and ‘livestreaming of performances’ held “greater relative importance to paid streamers who are looking to switch/add a service in the next six months” versus things like ‘ease of use’ and ‘high-quality audio’.

‘Exclusive artist content’ and ‘livestreaming of performances’ could, of course, feature in so-called superfan clubs, which will likely be included in the new ‘deluxe’ Spotify tier.

Stats showing that consumers have become increasingly less bothered about high-quality audio since 2021 could be interpreted as vindication for Spotify’s unwillingness to prioritize the feature over the past four years.

Knowing this information now, it actually makes sense for Spotify to roll HiFi audio as part of a wider product update or ‘deluxe’ tier that includes superfan content, rather than making HiFi audio the core focus of an additional tier.

On the flipside, these stats could be a bit concerning for those platforms that have invested heavily in a HiFi audio-audio strategy over the past four years.

Apple Music, for example, is a prominent advocate for high-fidelity music streaming. Remember, both lossless audio and Spatial Audio with support for Dolby Atmos are available on its service for for no additional charge.

Plus, in January, we reported that music available in the Spatial Audio format on Apple Music would receive a greater share of royalties from the platform.

Apple Music said, in an update to its label patterns obtained by MBW at the time, that the royalty share change was “not only meant to reward higher quality content, but also to ensure that artists are being compensated for the time and investment they put into mixing in Spatial”.

The platform also said that it was seeing “wide adoption of Spatial from the biggest hitmakers worldwide” with 80% of the songs to reach Apple Music’s Global Daily Top 100 in the past year available in Spatial. But here’s a big question I’d like to know the answer to: Is Apple getting a return on its investment in lossless and spatial in the form of new subscribers?

With lossless audio serving as a key differentiator for Apple Music (and Amazon Music) versus one of their biggest rivals, Spotify, the inclusion of this feature on their platforms for free would be totally justified if they were seeing healthy subscriber growth.

But we have reason to believe that they’re not.

“While Spotify, YouTube and many regional and local platforms have continued to exhibit healthy growth in subscribers, other large partners have been less successful in driving global adoption have seen a slowdown in new subscriber additions.”

Boyd Muir, Universal Music Group, speaking on UMG’s Q2 earnings call

Neither Apple Music nor Amazon Music report their subscriber metrics publicly, but on Universal Music Group’s earnings call last week, UMG’s Boyd Muir pointed to a “slowdown in subscriber growth at certain platforms”. He didn’t name those platforms.

He added: “While Spotify, YouTube and many regional and local platforms have continued to exhibit healthy growth in subscribers, other large partners have been less successful in driving global adoption have seen a slowdown in new subscriber additions.

“We are engaged with all our key partners in an in-depth dialogue regarding product innovation to target high-value customers and drive future revenue growth. One indication of these discussions was highlighted in Spotify’s comments yesterday around a super-premium offering.”

As you can see, Muir specifically cited Spotify and YouTube as seeing healthy subscriber growth. Although he didn’t name them, he could have been talking about Apple Music and Amazon Music. Both platforms offer high-fidelity audio at no additional cost.

If UMG’s leadership team were referring to Apple Music and Amazon Music as the large partners who “have seen a slowdown in new subscriber additions” – higher-fidelity audio has evidently not been enough of a differentiating factor of those services for consumers to choose them over Spotify.

Circling back to the potential of Spotify’s $18-per-month ‘deluxe’ tier and its superfan element, Luminate reported that 48% of consumers “at risk of churn” prioritize exclusive artist content (see below).

Meanwhile, when compared to the average paid music streamer, 49% of consumers “at risk of churn” prioritize additional content outside of music, while 50% prioritize live streaming of events, concerts and live performances.Music Business Worldwide