What is Hidden Behind Consumer Brand Engagement? The Case of Spotify and the Effect of Consumer Brand Engagement on the Conversion and Retention of Users to a Premium Tier

Diogo d'Orey

Student thesis: Master thesis

Abstract

The way people consume, own, and listen to Music has drastically changed throughout the past decade. The digitalization has made Music move from a physical to a digital format. Currently, the Online Music Streaming (OMS) services are both the main driver and source of revenue for the Music Industry. Spotify, the world’s largest OMS provider, operates in a Freemium Business Model by offering two versions of the service. The Free version is a limited-featured, advertised-based version in which the Ad-Supported Users enjoy the service free of costs. The Premium version offers an enhanced-featured and free-of-advertisement service, wherein the Premium Subscribers must pay a monthly fee. Although most users are operating in the Free version, the Premium Subscribers are the ones that positively contribute to the Spotify’s long-term sustainability. Accordingly, an emphasis is given to understand the conversion and retention of users to a Premium tier.
Consumer Brand Engagement (CBE) is defined as a consumer’s motivationally driven, volitional investment of focal resources into brand interactions in service systems. With its theoretical foundations on the Service-Dominant Logic and Relationship Marketing, CBE is mostly assumed to be positively correlated to the consumer’s brand loyalty and the firm’s performance. Still, to date, no empirical evidence has supported this general assumption that high levels of CBE are associated with a positive firm’s performance. By choosing Spotify as a case study, a Conceptual Framework was created in order to evaluate and investigate how and why CBE is affecting both the conversion of Ad-Supported Users and the retention of Premium Subscribers to Spotify’s premium tier.
Through an online questionnaire, Spotify’s Ad-Supported Users (n= 201) and Premium Subscribers (n=485) participated in Study 1 and Study 2, respectively. The results of this Thesis validate and extend the existing CBE knowledge. In the OMS context, CBE proves to be a context-dependent construct. Whereas CBE positively impacts the continuance intention of the Premium Subscribers, it negatively influences the intention of Ad-Supported Users to convert to the Premium version, by having a suppression effect. Thus, an asymmetrical relationship between CBE and consumer behavioral manifestation occurs. CBE is then defined as passive and negatively valenced for the Ad-Supported Users, but as active and positively valenced for the Premium Subscribers. This Thesis provides relevant managerial and academic implications to the Marketing practitioners and to the academic literature.

EducationsMSc in Brand and Communications Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages110