Universal Music Group in ‘Advanced Talks’ With Spotify for Superfan Tier

Universal Music Group and Spotify are in “advanced talks” over a high-priced, superfan tier of the streaming service that offers a better user experience than the standard subscription plan. The status of the negotiations were revealed by UMG CFO Boyd Muir on Tuesday during the company’s Capital Markets Day presentation in London.

That a Spotify superfan tier is in the works has been known for a few months. Speaking to investors during Spotify’s July 23 earnings call, CEO Daniel Ek said the deluxe tier would “probably” be priced at $17 or $18 per month and offer “a lot more control, a lot higher quality across the board, and some other things that I’m not ready to talk about just yet.” A previously planned superfan product, HiFi, was announced in 2021 then delayed the following year. In June of this year, news broke that the company was again planning a high-end tier for audiophiles.

As the largest streaming markets mature and subscription growth slows, UMG and other labels are increasingly looking to more serious music fans for revenue growth. While streaming dominates recorded music revenues, companies have done little to generate more revenue from consumers willing to pay more for an enhanced streaming experience. Instead, streaming services have offered ways for consumers to save money through student plans, family plans and bundles with other digital services.

“Superfans, the most avid 20%-30% of all music listeners, once drove over 70% of recorded music spending,” Muir said. “Streaming monetizes them, but not nearly as well as in the past.”

China’s Tencent Music Entertainment already offers what it calls a Super VIP tier that offers perks such as early access to digital albums and access to ticket sales. Super VIP costs five times the standard subscription plan, and Muir said a “double-digit percentage” of Tencent Music’s subscribers have signed up for it. Based on the 117 million subscribers it claimed on June 30, a 10% adoption rate would mean 17 million consumers were willing to pay 400% more for an upgrade to Super VIP.

That adoption rate could ultimately go much higher for Super VIP and other superfan tiers. According to UMG’s own research, the company said Tuesday, 23% of current streaming subscribers would pay more for a better music experience.