September 14, 2016:Spotify reaches 40m subscribers six months after passing 30m (plus $5bn total payouts)

The growth of Spotify Premium continues apace: the music-streaming service now has 40 million paying subscribers, having added 10 million of them in the last six months alone.

CEO Daniel Ek revealed the new milestone in a tongue-in-cheek tweet earlier this afternoon:

https://twitter.com/eldsjal/status/776049074386694144

Taken at face value, the new milestone suggests that Spotify’s subscriber growth is accelerating. It took 11 months for the service to grow from 10 million to 20 million subscribers; eight months to grow from 20 million to 30 million; and now six months to reach 40 million.

To channel Donald Rumsfeld, there are some known unknowns in that figure. Spotify does not break out how many of those 40 million subscribers are additional members on a family plan, or people on a half-price student plan.

Both groups can legitimately be claimed as “subscribers”, but they bring down Spotify’s average revenue per user – particularly in the case of family-plan members, who used to be charged $4.99 each, but who now can be one of up to five people under a single $14.99-a-month subscription.

There is also the question of Spotify’s ‘three months for 99 cents’ promotional offer. The last one stopped taking signups on 30 June, meaning that anyone who started on the offer in the latter half of that month will still be on it now. In fairness, anyone who signed up to it before that will now either have churned off or started paying full whack.

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In any case, Spotify isn’t claiming that all 40 million subscribers are paying $9.99 a month: its milestone is purely about the number of people. The company has also confirmed to Music Ally today that it has now paid out more than $5bn to music rightsholders since its launch in 2008, up from $1bn in May 2014, then $3bn in June 2015.

Spotify’s growth has cemented its status as the most popular music subscription service, with Apple Music in second place with 17 million subscribers.

Deezer claimed six million subscribers up until June, when it removed the figure from the “About Deezer’ section of its press releases, so it is unclear whether the total has risen or fallen. Update: Music Ally contacted Deezer, and the company confirmed the 6m figure is still valid.

Napster claimed 3.5 million subscribers in July; while Tidal said it had 4.2 million in June – there, the uncertainty is how many were free trialists who’d signed up to access exclusive albums.

Google Play has never declared numbers. Nor has Amazon Prime Music, although it is bundled into Amazon’s Prime membership, while YouTube Red and SoundCloud Go’s figures are equally mysterious. Pandora has around four million subscribers for its Pandora One tier, although that is ad-free radio rather than full on-demand streaming like the services above.

Here’s a comparison of Spotify and Apple Music’s subscriber growth, incidentally:

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It’s tempting to look at that graph and speculate that Apple is going to struggle to catch up with Spotify. Yet there is a long way for this race to run: with a big redesign for Apple Music going live this week, the Apple Music Festival to come this month, and likely another burst of marketing activity, Apple’s rate of growth may well surge again in the coming months, while Spotify has its own levers to pull to ensure its growth continues.

Beware of premature conclusions about which service is “winning” then, as ever. Perhaps the more important (and worrying) question for the music industry is why no other streaming service appears to be showing similar growth to Spotify and Apple Music.

Stuart Dredge
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