Spotify ramps up policy enforcement on family plans

As reported by Music Business Worldwide, Spotify appears to be stepping up enforcement of existing policies regarding Family and Duo subscription plans by requiring users to scan a QR code in person on the plan manager’s device in order to maintain access to it. Those who fail to scan the address verification QR code within seven days will see their account demoted to the free tier and be barred from joining any other Duo or Family plan for 12 months.

Spotify’s support documentation verifies the policy after users on Reddit began posting reports of receiving the QR prompt. The enforcement stems from Spotify’s requirement that family plan members reside at the same address—a seemingly reasonable policy in concept. But what if you have a child away in college, a spouse who works on the road, or any number of other circumstances that might see families separated by physical distance? The policy could extend beyond friend groups looking to save a buck, affecting actual families who thought they were using the program as intended.

Goldman Sachs analysts, in their October 15 Music in the Air: 10 Years On report, made available by HITS Daily Double, estimate that “a meaningful share of family plan users are not actual household members, but rather friends sharing a plan to reduce costs.” The report goes on to add, “We see additional monetization upside from tightening household verification on multi-user plans. Most family plans require members to reside at the same address, but enforcement has been minimal in practice.”

If the pressure on the accounts policy from Wall Street sounds familiar, it should. Streaming services have often turned a blind eye to account sharing during their growth periods, only to walk back the leniency once viewers are hooked. Netflix tweeted in March of 2017 that “Love is sharing a password” before launching its own enforcement policies in May of 2023. Later that year, Netflix raised prices up to 17 percent, and by April of 2024, the company saw the policy pay off with 9.3 million added subscriptions and a 54 percent bump in operating income. Netflix isn’t alone in the practice, as competitors like Max (now HBO again) and Disney+/Hulu eventually followed suit with their own policy enforcement.

Goldman’s report argues that while family plans are great for getting subscribers onto the platform, “the per-user monetization of these plans materially lags individual plan pricing. In our view, these plans offer a greater value proposition to consumers than the standard individual tier, which we believe gives DSPs the opportunity to capture more value through higher pricing increases or by tightening the definition/eligibility of the family plan, without meaningfully impacting demand.” In short, analysts are confident that music streaming services such as Spotify can enforce strict account policies, raise prices, and still make more money.

So if you go to load up your favorite playlist on a shared account, you might soon be getting a warning that it’s time to check in with your plan manager. If that’s physically impossible to do within seven days, you might need to look into an alternative streaming service—or start digging through drawers until you find that old iPod.

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