South Korea Has a Serious Problem With Sagging Subscriber Growth — Now Spotify Is Introducing a Free Ad-Supported Tier In the Country

Photo Credit: Ainur Iman

Spotify has launched a free, ad-supported tier in South Korea as subscription rates seriously stagnate in the seventh-largest recorded music market. The addition switches the user-acquisition strategy substantially and introduces Spotify’s ‘freemium funnel’ into the South Korean equation.Three-and-a-half years since Spotify launched in South Korea, the streaming giant is now debuting a free, ad-supported tier in the region. Then lengthy delay suggests a major shift in strategy following weaker paid subscription data. While Spotify hasn’t commented on the strategy behind the move, the addition appears part of a plan to combat stagnating subscription growth rates in the country.

On a broader note, the announcement comes against a backdrop of growing subscriber-growth plateaus in more developed and lucrative music markets. Just recently, Goldman Sachs highlighted a number of declining growth rates across the globe, with South Korea displaying the slowest year-over-year increases for 2023.

That was highlighted in DMN Pro’s most recent report on the streaming subscriber plateau in major markets — a report that also questions whether growth in emerging markets will be enough to counter the problem.

Goldman Sachs’ Music in the Air report acknowledged material 2023 streaming-subscription slowdowns not only in the U.S., but in developed markets across Europe, Asia, and Oceania.

In a statement emailed to Digital Music News, Spotify says the introduction of its free tier “opens an exciting new avenue for advertisers and brands in South Korea looking to reach a predominantly young, highly engaged audience.”As the world’s seventh-largest recorded music market per the IFPI, the addressable market in South Korea is significant. Users in South Korea can now sign up for a free account to access Spotify’s playlists, podcasts, and more, and can choose to further upgrade to premium on-demand, ad-free music.

“Brands who advertise on Spotify’s free tier can deliver their message effectively as Spotify ads capture twice as much attention [as] social media platforms globally,” the company said.

Spotify says the move will enable them to better connect global audiences with Korean music, including K-pop. The average monthly streams of artists from the country on the platform now surpass 5.8 billion streams, according to the company, since the streaming platform’s launch in South Korea back in 2021.“The launch of Spotify Free in South Korea is an exciting moment, not only for consumers but for artists and the industry at large,” said Gautam Talwar, General Manager, Asia Pacific, Spotify.

“We’re opening the door to every Korean listener to start discovering and connecting with millions of songs and podcasts with our technology and service — which means huge potential for new audiences, discoverability, and ultimately, more revenue for artists.”

“We are committed to growing an expanding artists’ reach worldwide and the launch of our Free offering in the market will add even more Korean listeners to the mix,” Talwar continues.

Spotify cites markets like the United States, Indonesia, the Philippines, Japan, Mexico, Brazil, Thailand, India, South Korea, and Taiwan as being among the top streamers of music from South Korean artists. Artists from South Korea across all genres have experienced over 70% growth since the platform’s launch in the country three years ago.

In addition to the new ad-supported tier, Spotify offers three paid tiers in South Korea — Individual, Duo, and Basic, priced at 10,900 (~$8 USD), 16,350 (~$12 USD), and 7,900 South Korean Won ($5.8 USD), respectively.