How Spotify plans to keep its 500,000 paying users loyal

Now that streaming music service Spotify now has more than half a million paying customers, it plans to hold on to them.

CEO Daniel Ek has told a number of interviewers recently about the 500,000 Premium users figure – a significant milestone in the company’s growth. Ek told Music Week (subscription required) that this was because people were now using Spotify as a replacement for a traditional media player such as iTunes. “One of the unique assets and the reason why we have more than half a million people paying £9.99 a month for the [premium] service is because they actually use it as their primary media player”.

In a competitive marketplace, though, hanging on to those customers could be a challenge. A new job ad on Spotify’s website hints at how they plan to keep hold of them. The “Premium Manager – Anti-Churn”, based in London, will be charged with making sure customers stick around. How? By creating “A system to stop Premium users from churning and bring them back if they do churn using segmentation, early warning indicators, different communications channels and special offers“.

Preventing ‘churn’ (users moving to better offers elsewhere) is already a serious battle in the mobile industry and competition can lead to better deals for customers. Ever told your mobile network you were leaving, only to be giving a big discount to stick around? It looks like Spotify will be trying similar tactics to keep you in its arms. If other streaming music providers try similar tactics we could see an ultra-competitive “music service” industry that sells you access to music in the same way mobile firms sell access to their networks.

Streaming music is still in its infancy and how it will develop is anyone’s guess. Spotify rival We7 launched a news service last week, bringing it more in line with traditional radio while Apple is widely expected to launch a cloud-based version of iTunes in the future which could shake up the market entirely.

Spotify meanwhile promises a US launch this year, but then it said that last year too…