In a digital age where the consumer is in complete control of their music consumption, Spotify needs to look at behavioural economics to encourage people to pay for their service. ‘Reciprocity’ is a very underutilized but effective form of human behavior and could prove useful in this situation. Put simply, people will give back to others the form of service and behaviour that they have received first. In this case, it would be a user choosing to pay for the music they stream.
Research into voluntary payment has demonstrated the effect of reciprocity in the context of music purchase. One such study found that the desire to give something in return for the free pre-purchase access to the music, encouraged people to make a voluntary payment, and constituted the sequential reciprocity equilibrium (Regnerand Barria, 2009). On Spotify, artists have “volunteered” their entire catalogue to be enjoyed on the ‘freemium’ tier, thus users upgrading to the premium account could be considered as a way of returning the favour. Payment would therefore represent the reciprocity equilibrium and this is what Spotify need to capitalise on.
At present, Spotify are attempting to convince people to subscribe by applying restrictions to their free service. This is problematic as users can easily bypass these restrictions with illegal downloading or choosing to stream from other sites with fewer restrictions. Instead Spotify need to communicate that upgrading to a premium account is just a way for you to say “Thank you” to the artist for allowing you to have full access to their music from which you derive pleasure. Therefore my proposition is:
“Paying to stream music is a way of giving something back ”
It is also important to note that people generally don’t like to be told what to do. Thus, a campaign that reminds non-paying users that subscription is a way of giving something back would not be the ideal approach. Instead, a campaign based on the “assumption of compliance” would be more appropriate.
For example, adverts showing artists thanking Spotify users for supporting them or demonstrating what the money has helped them achieve, could trigger the physiological phenomenon of “warm-glow giving” – the positive emotional feeling people get from helping others. Finally, 40% of consumers don’t think brands are doing enough to demonstrate their beliefs in helping the world (Edelman Research, 2014). It might therefore be prudent for Spotify to invest a percentage of the subscription fee in a charitable cause to appear to be a purpose lead brand.