As Spotify’s label renegotiaions have dragged on, we’ve heard repeatedly that boosting paid subscriptions is a top priority for rightsholders. Today’s acquisition of Preact could help the music streamer accomplish that, without having to drastically alter the freemium tier that has driven strong user growth.
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Spotify has acquired San Francisco based Preact to boost its efforts to convert free users into paid subscribers. Converting more freemium users to paid subscribers is essential for Spotify to both satisfy label demands and for its own long term financial stability.
Details of the deal were not revealed, but Preact has raised $12.35 million since 2012, including a $7 million venture round in 2015.
Preact helps companies acquire new subscribers and retain current customers. The Preact team, which will be joining Spotify in the music streamer’s San Francisco and New York offices, specializes in predicting consumer behavior around subscription sign-ups and upgrades using analytics, behavioral science and machine learning.
“Finding the trends and behavior patterns in our data that correlate with paid subscriptions is incredibly valuable,” said Jason Richman, VP Product at Spotify. “The addition of Preact to Spotify’s team will help us design experiences that grow our premium customer base.”