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Spotify premium student discount: loss leader challenge to the young?

Spotify logo“The Student Discount is here,” Spotify announced today. “Spotify Premium is now 50% off for students.” This is for college students, I presume (I sneaked a peek at the discount form; it definitely asks users for their “college”). So qualified college attendees get ad free Spotify for $4.99 instead of $9.99. The discount comes as Pandora has upped its “Pandora One” ad free service from $3.99 to $4.99 a month.

Hooray! Competition! I guess that’s good, but given the huge percentage of revenue both of these services pay to royalties, this discount feels like a short term loss-leader manuever rather than a move towards long term sustainability.

Here’s from Pandora’s announcement: “the costs of delivering this service have grown considerably. For example, the royalty rates Pandora pays to performers via SoundExchange for subscription listening have increased 53% in the last five years and will increase another 9% in 2015.” Can these conditions be that much better for Spotify?

I also wonder whether most college students care that much about ads one way or another (“another” meaning willing to pay even a small monthly sum to avoid them). So here’s a question to you college based music lovers: do you hate ads enough to take the Spotify challenge? 

Update (3/26/2014): Looks like Spotify is already discounted for college students in UK under certain circumstances:

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