Spotify has purchased Preact, a four-year-old startup that utilizes machine learnings and audience behavior metrics via social media to draw and retain subscribers. Preact’s web site describes its service as having the ability to “identif[y] which of your customers are likely to churn, renew or upgrade by analyzing product usage patterns and operational data using big data, behavioral science and machine learning technologies.”
Spotify, the worldwide subscription leader in streaming with 100 million monthly users and 40 million paid subscribers (as of September), has had little trouble in beefing up its paying customer base as of late, having added 10 million of them since March. But as the company continues to build out product features — it has been continuously tweaking its playlist functions while beta testing new advertising products and tweaking its video strategy — a company like Preact would theoretically help guide which avenues its subscribers and potential new customers would gravitate towards and value most.
In a sponsored post from 2015 for VentureBeat, Preact was opaque in explaining its value proposition, but Spotify’s relatively slim portfolio of acquired companies however, strongly suggests that there’s some there there.
“Finding the trends and behavior patterns in our data that correlate with paid subscriptions is incredibly valuable,” Spotify’s vp of product Jason Richman says in a statement. “The addition of Preact to Spotify’s team will help us design experiences that grow our premium customer base.”
Subscription services are in the business of not only attracting customers but retaining them, and many closely guard their churn rate as a result. A July report from research group Cowen estimated Spotify’s churn rate to be 2.2 percent, a much better number than the 6.4 percent the study found for Apple Music, its closest competitor, which has accumulated 17 million subscribers since its June 2015 launch. Over the past year, Apple Music has largely focused on a strategy of leveraging exclusive content to attract subscribers, which has come under criticism in recent months for segmenting the potential audience base and forcing fans to juggle subscription services to hear the latest music.
Spotify has said repeatedly it is against long-term exclusives as bad for fans and bad for the industry.
The Preact team will work out of the streaming service’s offices in New York and San Francisco. A rep for Spotify did not return a request for comment as of press time.