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Spotify Acquires Preact, A Startup That Helps Companies Acquire New Subscribers

Spotify has announced that it has acquired Preact, a cloud-based service that helps companies acquire and retain subscribers.

Finding the trends and behavior patterns in our data that correlate with paid subscriptions is incredibly valuable,” said Jason Richman, VP product at Spotify, in a statement.

The addition of Preact to Spotify’s team will help us design experiences that grow our premium customer base.”

Preact’s core raison d’être is about predicting customers’ behavior around subscription sign-ups and upgrades, and it does so using behavioral science, machine learning, and analytics.

Preact looks at existing behavior in free users, including metrics on how they engage across all platforms, and predicts who is likely to drop-off and who could be encouraged to upgrade  it’s all about reducing churn.

Despite criticism, Spotify has maintained its free ad-supported tier as it looks to get more people signed-up, after which it pushes to convert people to pay the $10 / month subscription.

At last count, Spotify claimed 40 million paying subscribers  up 10 million in 6 months out of a total user-base of around 100 million people.

Originally founded out of Los Angeles in 2012, Preact upped sticks and moved to San Francisco where it raised a $4.6 million round of funding in 2014, followed by another $7 million round a year later.

As a result of this acquisition, Preact’s team will work out of Spotify’s existing hubs in New York and San Francisco.

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