Is Asia Spotify’s weak spot?
Its US$26 billion stock debut has tech industry mouths watering, but the music streaming company may have hit a bum note in the region, where piracy, limited budgets and a love of karaoke are conspiring against it
Agatha was shocked, sad and more than a little embarrassed when she received an email from Spotify recently saying her account had been suspended.
The student, 22, from Yogyakarta on Java island, Indonesia, had been caught using a pirated version of the music streaming service that granted her access to features that would usually require a subscription – advert free listening, unlimited access to songs and offline listening.
“I am ashamed to admit that I had been using a ‘crack’ version of Spotify Premium that I had found by [searching on] Google,” Agatha admitted.
Agatha’s misdemeanour cost the music streaming giant little. A subscription in Indonesia usually costs about 50,000 rupiah (US$3.60) per month – a pittance compared to the US$26.5 billion the Stockholm-based company raised last week in its stock debut, one of the largest public offerings ever in the tech sector. Nevertheless, taken collectively, people like Agatha are costing the company dearly, threatening to spoil the momentum of its market debut and highlighting its rocky path to profitability in Asia. In this region, limited disposable incomes along with rampant content and software piracy – a problem that remains despite repeated crackdowns – have created roadblocks for the music streaming giant’s global ambitions.
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Along with Africa and Australia, Asia accounts for just 10 per cent of the company’s user base, 157 million users at the end of 2017, compared with Europe’s 37 per cent and North America’s 32 per cent. Levelling those figures will depend in large part on winning over users like Agatha, who resorted to piracy because she “didn’t want to spend money just for an application”.