Understanding the Factors Influencing Customer Intention to Subscribe to Spotify Premium in Indonesia

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Jurnal Manajemen dan Bisnis Sriwijaya Vol.21 (1), 2023

Jurnal Manajemen dan Bisnis Sriwijaya (JMBS) | ISSN: 1412-4521

Vol. 21 No.1 2023 | Available online at http://ejournal.unsri.ac.id/index.php/jmbs

Understanding the Factors Influencing Customer Intention to Subscribe to Spotify Premium in Indonesia

Nafit de Amelia^a, Zhafarina Zatalini^b, Tri Wismiarsi^c

a,b,c

Sampoerna University, Faculty of Business. Indonesia.

Email : nafit.amelia@my.sampoernauniversity.ac.id^a, zhafarina.zatalini@my.sampoernauniversity.ac.id^b, tri.wismiarsi@sampoernauniversity.ac.id^c

ABSTRACT

Research Aim – This research aims to investigate the factors of attitude and perceived behavior control of young-adult customers in Indonesia that influence their intention to subscribe to Spotify premium.

Design/Methodology/Approach – This study is a quantitative study using descriptive and regression analysis. Data were collected from 100 respondents who have been subscribing to Spotify Premium services for at least 1 week.

Research Result – The results reveal that attitude and perceived behavioral control significantly influence the intention to subscribe, with attitude having a greater influence on customers’ intention to subscribe.

Research limitations – The age range of participants in the current study is restricted to those between the ages of 17 and 30. The generalizability of the study is also constrained because there were only 100 samples collected altogether.

Originality/value – This study is conducted in Indonesia while the previous research was conducted in China. The present research help provides feedback for the streaming music services industries, especially in Indonesia to improve their marketing strategies’ performance based on customer behavior and psychology to increase sales of businesses.

Keywords: Spotify Premium, Music Streaming Service, Attitude, Perceived Behavioral Control, Intention to Subscribe.

INTRODUCTION

For millennia, music has integrated itself into society across the globe, serving both cultural and emotional needs (Barata, 2021; Naveed et al., 2017). The development of the internet prompted the digitalization of music, which altered the product and services available to listeners and the way the music industry operated. One example is music streaming services.

Music streaming services are services that offer access to digitized music without requiring us to download and use up a lot of storage on our devices.

Music streaming services can be divided into two categories based on their source of funding: an advertisement-based free model or a subscription-based streaming model (Jiwhan et. al., 2017). The advertisement-based free model allows individuals to utilize services for free, while constantly disrupted by advertisements. Meanwhile, the subscription-based streaming model allows individuals to enjoy the services by charging them a subscription fee and allowing them to access specific features that are only available to subscribers.

Spotify is a music streaming service that uses hybrid models as a source of funding. They offer ad-based free services as well as subscription-based or premium services for their customers. It is known that from 2020 to 2021, premium services reported profits of roughly

€1.700 million, with revenues increasing by 23%, while ad-based free services recorded profits of 17% (Barata, 2021). The increase in revenue in premium services on Spotify led researchers to understand the factors that influence the customers’ intention to subscribe to the premium service of Spotify. Prior research conducted in China by Chang, et al.(2021) discovered that

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Understanding the Factors Influencing Customer Intention to Subscribe to Spotify Premium in Indonesia Nafit de Amelia, Zhafarina Zatalini, Tri Wismiarsi

JMBS Vol. 21 (1), 2023 | Hal.58

attitude and perceived behavioral control influenced users' desire to subscribe to the premium music streaming services.

Indonesia has 54% active internet users over the year 2020, making this country a great potential market for internet-based services (The World Bank Group; Tricahyono et al., 2019).

In order to get into the Indonesian market, music streaming services may target young people as they are more likely to utilize streaming services than others (Mavale & Singh, 2020). With various interesting features such as playlist recommendations and blend playlists with friends, Spotify can attract many customers, especially young adults. Therefore, this research aims to know the factors of attitude and perceived behavior control of young-adult customers in Indonesia that influence their intention to subscribe to Spotify premium.

In this research, data were collected by using an online survey that is distributed to young adults with various age ranges who are using Spotify services in Indonesia. The research was conducted using a google form, and the results were analyzed using statistical analysis software.

Two independent variables—attitude and perceived behavioral control—were investigated to evaluate their relationship with the dependent variable, that is consumer intention to subscribe to premium services.

The result of this research provides feedback for the streaming music services industries to improve their marketing strategies’ performance based on customer behavior and psychology to increase sales of businesses. In addition, this research benefits the other streaming music services industries to compare their marketing strategies and innovate the current marketing strategies.

LITERATURE REVIEW

Music Streaming Business Model

The business of streaming music like Spotify has emerged in the past few years and keeps increasing. Because of the ease that streaming services provide, over 28 million unique songs were played, compared to the seven million songs that were purchased in 2016 (―More Music Is Being Listened to By More People Than Ever Before‖). It portrays how music streaming makes users easy to listen to whenever they are in just one tap on their phone screen.

The company monetized and gained profit mostly from the premium music streaming services they provide. The premium services differ from the free services because the premium service eliminates the advertising when the users listen to the music. In addition, users are also able to download unlimited music and listen to the music while there is no internet connection.

Music streaming services became popular because it is practical and updated with recent technology.

Attitude

Attitude is related to thoughts as well as to feelings and emotions. Attitudes are the feelings people have about their own language or the languages of others (Crystal,1997). Thus, attitude to language is a construct that explains linguistic behavior in particular (Crystal,1997).

Moreover, attitude is a mental or neural state of readiness, organized through experience, exerting a directive or dynamic influence upon the individual’s response to all objects and situations with which it is related (as cited in Baker, 1992, p. 11). Attitude is a convenient and efficient way of explaining consistent patterns in behavior. It often manages to summarize, explain and predict behavior (Baker, 1992, p. 52). It means that someone's attitude toward something can be seen from the way they say, and actions related to the attitude object.

Attitude implies evaluation, which is usually done on a bipolar continuum from favorable to unfavorable, or from positive to negative, that could comprise attributes such as good-bad, harmful-beneficial, pleasant-unpleasant, and likable-dislikeable (Ajzen, 2001, p.

126). In addition, Eiser claims that these evaluations are related to a specific object, they are not

―free-floating‖, but have a quality of ―about ness‖ (2004). The attitude object can be any entity discriminated against by the individual, from concrete objects through abstract ideas, persons,

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events, and behaviors (Eagly, 1992; Maio & Haddock, 2004; Pratkanis & Greenwald, 1989). It can be concluded that attitude is related to thoughts as well as feelings and emotions.

The previous study used attitude to imply the intentions of customers to subscribe to premium music. Customers with a positive attitude will contribute to subscribing to premium services (Chang et al., 2021) Therefore, the following hypothesis is proposed :

H1: A person's attitude toward streaming music services will positively influence their decision to subscribe to the premium music streaming services.

Perceived Behavioral Control

What a person believes about behavior can also influence whether he or she will perform that behavior. Ajzen (2001) identified perceived behavioral control as a factor that influences behavior. Perceived behavioral control refers to an individual’s perception of the level of control he or she has over a behavior. For example, a person could have a favorable attitude toward losing weight, yet not believe he or she is capable of engaging in that behavior.

Wanting to lose weight but believing that it isn’t possible means that attitudes in favor of weight loss would not be reflected in behavior. Although many have successfully managed to lose weight, the key issue here is whether the specific recipients of the message believe (or perceive) that this would be possible for themselves. Many people have become aware of the need for a good night’s sleep, yet many fail to achieve it. This failure may be due to perceptions that because of a busy lifestyle or other factors, individuals have little personal control over getting more sleep (Ajzen,2001)

In this case, in addition to measuring a person’s attitude toward sleeping more, you would need to measure the person’s perceived behavioral control with regard to modifying his or her sleep patterns. Messages can directly address the issue of perceived behavioral control.

Including information about how to take control over an issue, such as how to lose weight successfully, can help increase the chances that the target of the persuasive message will perceive the ability to control that behavior. For example, an article on a popular medical information website provided advice on how to lose weight and focused on beliefs. It is targeted at helping individuals feel in control of their eating behavior, with statements such as, ―Picture yourself thin,‖ ―Have realistic expectations,‖ and ―Set small goals.‖ It is written in the form of an article, but the goal of the author is clearly to change what a person believes about weight loss and one’s ability to lose weight. When the perceptions of control increase, so do the likelihood that the overall persuasive message will be more successful.

The relationship between attitude and behavior increased when researchers began measuring attitudes and behaviors with the same level of specificity. For example, Davidson and Jaccard (1979) conducted a study dealing with attitudes and behaviors regarding birth control. They measured the attitudes of 244 women toward birth control, birth control pills, using birth control pills, and using birth control pills in the next 2 years. They then followed up to see which women used birth control pills during those two years (specific behavior). Note that the more specific the attitude, the larger the relationship with the behavior. Thus, the more specific the measures were on the action, target, context, and time dimensions, the better the attitude-predicted behavior. Ajzen and Fishbein’s (1977) review of more than 100 studies further supported this conclusion by finding that the highest correlations between attitudes and behaviors occurred in the studies that measured behavior and attitude with the same level of specificity.

A prior study conducted by Chang et al. in China (2021) found that behavioral factors affect customers' intentions toward premium music services. Researchers are interested in finding out if behavior impacts customers' intention to subscribe to premium music services in Indonesia. Therefore, the following hypothesis is proposed :

H2: A person's perceived behavioral control towards premium music streaming services will positively influence their intention to subscribe to the premium music streaming services.

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JMBS Vol. 21 (1), 2023 | Hal.60 Figure 1. Research Framework RESEARCH METHODOLOGY

Measurements

This study’s survey reflects eight items for two variables that were assessed, including

―attitude‖ and ―perceived behavioral control‖ based on prior research conducted by Chang et al.

(2021). The dependent variable of these variables is the intention of people to subscribe to Spotify premium services which is indicated by the ―intention to subscribe‖ variable. All variables were measured using a five-point Likert scale (1 = strongly disagree to 5 strongly agree). Likert scales were used because it is convenient to obtain the participant's perspectives on the topic and is easy to understand for the participant of the survey. Additionally, there are five items regarding socio-demographics that were collected from respondents, including gender, age, level of education, occupation, and monthly expenses.

Attitude was measured by four items, such as ―It is worthwhile to subscribe to Spotify premium services.‖; ―It is necessary to subscribe to Spotify premium services.‖; ―Using Spotify premium services could improve my music listening experience.‖;‖ Overall, my attitude toward Spotify premium services is favorable.‖ (Chang et al., 2021).

Perceived behavioral control was measured by four items, such as, ―It is easy for me to operate the process of using Spotify premium services.‖; ―I have the knowledge and ability to utilize and enjoy the contents of Spotify premium services if I subscribe to it.‖; ―I can easily afford the fee of Spotify premium services.‖; ―Overall, using Spotify premium services is completely within my control.‖ (Chang et al., 2021).

Intention to subscribe was measured by four items, such as ―I intend to pay for Spotify premium services.‖; ―I will frequently use Spotify premium services in the future.‖; ―I will enjoy using the Spotify premium services.‖; ―I will strongly recommend Spotify premium services to others.‖ (Chang et al., 2021).

H1+

H2+

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JMBS Vol. 21 (1), 2023 | Hal.61 Table 2: Measurement of Variables

Variables Items Measures

Attitude ATT 1 It is worthwhile to subscribe to Spotify premium services.

ATT 2 It is necessary to subscribe to Spotify premium services.

ATT 3 Using Spotify premium services could improve my music listening experience.

ATT 4 Overall, my attitude toward Spotify premium services is favorable.

Perceived

Behavioral Control

PBC 1 It is easy for me to operate the process of using Spotify premium services.

PBC 2 I have the knowledge and ability to utilize and enjoy the contents of Spotify premium services if I subscribe to it.

PBC 3 I can easily afford the fee of Spotify premium services.

PBC 4 Overall, using Spotify premium services is completely within my control

Intention to INT 1 I intend to pay for Spotify premium services.

Subscribe INT 2 I will frequently use Spotify premium services in the future.

INT 3 I will enjoy using Spotify premium services.

INT 4 I will strongly recommend Spotify premium services to others.

Data Collection

According to data provided by ―We Are Social‖, it is stated that 66.2% or 181.9 million Indonesian people aged 16 to 64 are internet users by January 2021 (Kemp, 2021). Out of that population, 84% of internet users listen to music streaming services. Thus, the subjects in this study were young adults with an age range of 18-24 years old who are using music streaming services, especially Spotify in Indonesia.

The survey data was collected through an online questionnaire with the support of Google Form. The reason for using Google Form to construct the online survey is because it has numerous features that are accessible for free and convenient to use compared to other online survey platforms. Furthermore, by employing this platform, all respondents are able to engage in the survey through their mobile devices straightforwardly.

Data collection which uses an online survey was conducted for two weeks (November 6th, 2022 until November 20th, 2022). The link to the questionnaire was sent to the participants via social media such as WhatsApp, Instagram, and Twitter. In this online survey, all respondents respond to the questions voluntarily, and each question could be understood by respondents without leading questions. There was an introduction at the beginning of the questionnaire that explained the purpose of this survey and the instruction to answer the questions clearly. For this study, there were 123 respondents who responded to the survey;

however, only 100 met the respondent’s criteria.

Data Analysis

For the purposes of this study, descriptive statistics and regression analysis were performed. In order to facilitate data analysis, the SPSS 24 software was utilized as a tool. SPSS is a software analysis tool that has been utilized for a considerable amount of time and is used extensively. The purpose of utilizing SPSS is due to the fact that, this software is much simpler to handle and operate compared to other statistical software.

RESULTS AND DISCUSSION

Descriptive Statistics

According to the results of the survey, we have received 123 responses in total.

However, according to the screening of the data, only 100 of the respondent's data are valid.

This is because 23 of the 100 respondents do not meet the criteria of the respondents that we

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require, which is that they have ever used Spotify premium music services for at least one week.

The demographic information of the sample is presented in Table 2 below. The information includes gender, age, education level, current occupation, and monthly expenses.

Table 2: Sample Demographics

Demographic Variables Items Frequency Percentage (%)

Sex Male 37 37

Female 63 63

Age <17 years old 3 3

17 - 20 years old 34 34

21 - 25 years old 59 59

26 - 30 years old 4 4

Education Level Bachelor’s degree 29 29

High school graduate 69 69

Middle school graduate 2 2

Current Occupation Employee 16 16

Apprenticeship 1 1

Student 78 78

No occupation 5 5

Monthly expense Rp700.000 17 17

Rp700.001 - Rp1.000.000 13 13

Rp1.000.001 - Rp1.500.000 15 15

Rp1.500.001 - Rp2.000.000 18 18

Rp2.000.001 - Rp3.000.000 17 17

Rp3.000.000 20 20

Table 3 shows that the minimum value is 1, this indicates that there is a respondent who strongly disagrees with the statement being asked, and the maximum value is 5, this indicates that there is a respondent who strongly agrees with the statement being asked. The results reveal that, out of 100 respondents, each question received a mean and median score of greater than 3.5 and 4, respectively, indicating that respondents as a whole agree with each issue.

Table 3: Descriptive Statistics

Items Mean Median Mode Standard Deviation Min. Max.

ATT 1 4.31 5.00 5 0.982 1 5

ATT 2 3.86 4.00 5 1.189 1 5

ATT 3 4.23 4.00 5 1.004 1 5

ATT 4 4.23 4.00 5 0.973 1 5

PBC 1 4.29 5.00 5 0.957 1 5

PBC 2 4.23 4.00 5 0.952 1 5

PBC 3 3.64 4.00 4 1.133 1 5

PBC 4 4.19 4.00 5 0.950 1 5

Items Mean Median Mode Standard Deviation Min. Max.

INT 1 3.89 4.00 4 1.154 1 5

INT 2 3.91 4.00 5 1.207 1 5

INT 3 4.31 4.50 5 0.929 1 5

INT 4 3.91 4.00 4 1.065 ¹ ⁵

Source: SPSS Output Version 24.0, 2022.

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JMBS Vol. 21 (1), 2023 | Hal.63 Reliability and Validity Statistics

Table 4: Reliability Statistics

Construct Cronbach’s Alpha Based on Standardized Items ^{N of Items}

ATT 0.909 4

PBC 0.809 4

INT 0.900 4

Table 5: Discriminant Validity using Pearson Correlation

ATT PBC ^INT

ATT 1 0.737 0.866

PBC 0.737 1 0.741

INT 0.866 0.741 1

Cronbach's Alpha for all variables that have been evaluated, including the independent variable (Attitude, Perceived Behavioral Control) and the dependent variable (Intention to Subscribe), has been shown to be greater than 0.7, which is the lowest number that is considered acceptable. This means that all three variables are reliable. In addition, the results of the Pearson Correlation demonstrate that the coefficient correlation between the independent variable is less than 0.8, which shows that there is no multicollinearity between them, so all variables are valid in terms of discriminant validity. The followings are the values of each coefficient correlation: ATT to INT (0.866), PBC to INT (0.741), and ATT to PBC (0.737).

Regression Analysis

Figure 2. Normal P-P Plot of Regression Standardized Residual

Figure 3. Scatterplot of Regression Standardized Residual

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Figure 2 and Figure 3 show the distribution of the data. The points in Figure 3 area closed to the 45-degree line, which means that the data is normally distributed. Meanwhile, Figure 4 determines the correlation that exists between the two variables. The values of data points that tend to rise together imply a positive relationship between the dependent and independent variables. Though this clustering of data points is not particularly tight, it is possible to determine that the correlation is quite strong.

Table 6: Regression Model Summary

Model R R

Square

Adj. R Squar

e

Std.

Error of the Estimate

Change Statistics R

Square Change

F

change df1 df2 Sig. F Change

1 0.879 0.773 0.768 0.46044 0.773 165.226 2 97 0.000

Source : SPSS Output Version 24.0, 2022.

Table 7: Regression ANOVA

Model Sum of Squares df Mean

Square F Sig.

1 Regression 70.058 2 35.029 165.226 0.000

Residual 20.565 97 0.212

Total 90.623 99

Table 8: Regression Coefficients Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

95% Confidence Interval for B

B Std.

Error Beta Lower Bound Upper

Bound

1 (Constant) -0.140 0.248 -0.563 0.575 -0.632 0.353

ATT 0.728 0.075 0.699 9.772 0.000 0.580 0.876

PBC 0.273 0.086 0.226 3.165 0.002 0.102 0.444

The R square in Table 6 shows how much the independent variable influences the dependent variable. According to the findings, two independent factors (ATT and PBC) had a 77.3% impact on INT. The residual value of 22.7% indicates that the dependent variable is affected by other variables, which were not researched by this study. Furthermore, the adjusted R square shows that if we added 1 variable, the R square will be decreased to 76.8% due to more uncertainty. Additionally, the significance F (0.00) is less than the significance alpha (0.05), which indicates that the dependent variable was influenced by two independent variables simultaneously. Table 8 further demonstrates that each independent variable has a positive and significant influence on the dependent variable, with ATT having a bigger influence than PBC on INT due to ATT's higher t statistic. Finally, from the analysis, we can formulate the regression equation as

Y = -0.140 + 0.699X1 + 0.226X2

From the equation above we interpret that for every increase in variable X1 (Attitude) by 1 unit, variable Y (Intention to subscribe) will increase as much as 0.699 unit. In addition, for every increase in variable X2 (Perceived Behavioral Control) by 1 unit, variable Y (Intention to subscribe) will increase by 0.226 units. In other words, improving "Attitude" and "Perceived Behavioral Control" can increase "Intention to Subscribe."

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JMBS Vol. 21 (1), 2023 | Hal.65 Discussion

Data analysis reveals that both independent variables, 'Attitude' and 'Perceived Behavioral Control,' influence the 'Intention to Subscribe,' with 'Attitude' having a greater influence than 'Perceived Behavioral Control.' This means that the findings support the stated hypothesis, as well as the findings of previous research conducted by Chang et al. (2021).

First, Hypothesis 1 demonstrates that one's perception of how subscribing to premium music streaming services will affect one's music experience will improve if one develops a positive or favorable attitude toward such services. Second, Hypothesis 2 demonstrates that if a person possesses both mental capacity and related equipment for utilizing the services, he or she will try to accept these premium services in order to have a better music experience.

CONCLUSION

Spotify is a music streaming service that uses hybrid models as a source of funding and generates profit mostly from its premium music streaming services. This leads to the objective of this research, which is to understand the factors influencing Indonesian customer intention to subscribe to the premium music streaming services. While several factors can influence the customer as stated by previous research conducted by Chang, et al. (2021), researchers conclude that attitude and perceived behavioral control also influence Indonesian customers to do premium subscriptions with attitude as a greater factor than the perceived behavioral control.

Our suggestion to Spotify as one of the music streaming service providers or other businesses that operate in the music streaming industry is to focus more on attitude variables, such as how to make customers feel that it is necessary and enjoyable to subscribe to their premium services.

RESEARCH LIMITATIONS AND FUTURE RESEARCH

There are limitations to the current study. First, the age range of participants in the current study is restricted to those between the ages of 17 and 30. In order to obtain results that are more representative of the population as a whole, the research should include participants from a wider variety of ages and educational backgrounds. Second, the study that has been done up to this point is constrained because there were only 100 samples collected altogether. In future studies, we are hoping that researchers will be able to collect a greater quantity of data, to support the generalizability of the research findings.

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