21 03 16

Spotify now has 30m paying subscribers

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Spotify has reached a new milestone: 30 million paying subscribers, having added 10 million in the last nine months.

The announcement was unorthodox: rather than a press release or blog post, chief executive Daniel Ek tweeted the figure while highlighting a completely different story.

“We have 30 million @Spotify subscribers, but none of them are in Cuba … yet. So cool to see Cuba opening up!” wrote Ek, linking to a photo taken in the country by a Reuters photographer.

Spotify’s last public figures were released in June 2015 when it had 75 million monthly active users, with 20 million of them paying for the music-streaming service.

The company’s previous milestones included 15 million subscribers in January 2015; 10 million in May 2014; and 5 million in December 2012, four years after Spotify launched.

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Spotify’s growth is currently the subject of intense debate within the music industry, with rival Apple Music also growing fast. Apple Music launched in June 2015, and reached 10 million paying subscribers just six months later in January 2016. The following month, it reached 11 million.

The two companies are both using “freemium” strategies to grow their audiences, albeit in different ways. Apple is giving a free three-month trial to anyone who tries Apple Music, at which point they have to start paying if they wish to continue using the premium service.

Spotify continues to operate free and premium versions of its service, with the former funded by advertising. There has been pressure on Spotify to place more restrictions on its free tier, but the company has been resisting, arguing that it is doing its job at converting free users into paying customers.

In his tweet, Ek did not provide a new figure for Spotify’s monthly active users (MAUs) – darn that 140-character limit! – so for now we cannot say for sure how Spotify’s conversion rate is changing.

We can have a good guess though. It’s an open secret that Spotify is very close to reaching the 100 million MAUs milestone. If it hits that total, 30 million subscribers would represent a conversion rate of 30%.

In May 2014 when Spotify revealed that it had 10 million subscribers, it had 40 million users – a 25% conversion rate. When it made its 20 million subscribers announcement in June 2015, it had 75 million users – a 26.7% conversion rate.

That conversion rate is creeping up, then. Spotify’s ‘$1 for three months’ discount subscription offers may have played a significant part in that – a couple have run since the 20m subscribers milestone last June.

The last promotion kicked off in December 2015, so has only just come to an end. That may be reason for caution about the 30 million milestone: some of those new customers will have only just emerged from the $1 trial.

The big picture, though: Spotify and Apple between them have added more than 21 million new music-streaming subscribers in the last nine months. Bear in mind that at the end of 2014 there were an estimated 41 million subscribers for all streaming services globally, according to industry body the IFPI.

That’s encouraging overall growth, and it also hints at a story beyond the familiar ‘which model is best?’ arguments: for now, Spotify and Apple’s intensifying rivalry is delivering similar growth for both companies in the metric of paying subscribers.

Note, as many artists and songwriters will point out, there are other effects of this growth that are more controversial, in terms of how those subscribers’ cash is divided, paid out and tracked through the music industry system.

One final thought: Apple is holding a big press event tonight, where it’s expected to unveil new iPhone and iPad models. But perhaps we’ll get an update on Apple Music subscribers too…

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Stuart Dredge
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