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Spotify has announced that it has acquired Preact, a cloud-based service that helps companies acquire and retain subscribers. Terms of the deal were not disclosed.
“Finding the trends and behavior patterns in our data that correlate with paid subscriptions is incredibly valuable,” said Jason Richman, VP of 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 raison d’être lies in 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 also serves to help retain those who are already signed up. Preact is ultimately all about reducing churn.
Despite criticism, Spotify has maintained its free ad-supported tier as a way to encourage people to sign up for its service, at which point it pushes to convert users to a $10 / month subscription. At last count, Spotify claimed 40 million paying subscribers — up 10 million in six months — out of a total user base of around 100 million people.
Spotify has made six previous known acquisitions, kicking off with music discovery service Tunigo back in 2013. This was followed by the Echo Nest in 2014, in a deal that has proven to be a key tool in Spotify’s music-recommendation arsenal. And last year, Spotify snapped up Seed Scientific, a consulting confirm that specializes in data science and analytics. In 2016, Spotify has boosted its product development ambitions with the acqui-hire of two startups, Soundwave and Cord Project. And earlier this year, Spotify acquired CrowdAlbum, a service that aggregates photos and videos from artists’ live shows — this was Spotify’s first acquisition since raising a new $1 billion war chest.
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 the Spotify acquisition, Preact’s team will work out of Spotify’s existing hubs in New York and San Francisco. But there is no word on whether Preact will continue to offer its service to other companies or not — we’ve reached out to Spotify and will update here when we find out.
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