Since Deezer announced its new paying-subscribers milestone this morning, I’ve been mulling a piece comparing it to Spotify, and whether it’s possible to gauge their relative growth.
Paul from Digital Music News beat me to the punch with a post, but our conclusions are different – and those differences are worth thinking about.
He thinks Deezer is “on pace to become bigger than Spotify in 2014”, based on calculations that “Deezer is now adding more than a million paying subscribers every 4 months, roughly double the pace of Spotify… It only took Spotify three months to go from five to six million, but it’s taken more than seven months (at least) to reach seven million. Deezer is accelerating; Spotify looks to be decelerating.”
The difficulty with this calculation is that it relies on the assumption that because Spotify hasn’t announced that it has 7m paying subscribers, it has yet to reach that milestone. My suspicion is that this isn’t the case, and that Spotify is instead sitting out announcements of 7m, 8m and 9m paying subscribers in favour of waiting for the big 10m milestone.
In the absence of any update on the 6m figure that Spotify announced in March, journalists are entitled to speculate, of course. Here’s some speculation of my own, in an effort to understand how Deezer and Spotify might compare.
Deezer has certainly been adding new subscribers at the rate suggested by the DMN piece: 3m in the last year averages out at 250,000 a month. And that’s a number we can play with around Spotify’s last milestone in March:
– If Deezer was growing at double the pace of Spotify, meaning that Spotify was only adding 125,000 new subscribers a month, by the end of 2013 Spotify would have just under 7.13m paying subscribers.
– If Deezer and Spotify were growing at the same rate, so Spotify was also adding 250,000 new subscribers a month, by the end of 2013 Spotify would have around 8.25m paying subscribers.
– If Spotify manages to reach 10m paying subscribers by the end of 2013, that would mean it had been adding just under 445,000 subscribers a month since March, which would be 178% of Deezer’s growth rate.
– Riffing on that, only if Spotify fails to reach 10m paying subscribers before the end of July 2014, can we say it’s growing slower than Deezer. Although Deezer’s growth rate may increase or decrease in the coming months, so this is fuzzy maths.
Until we have a new subscribers milestone from Spotify, we won’t know which of those scenarios is closest to the truth, so the ball is in the company’s court. The story here, though, is more about both companies growing rather than one beating the other.
There’s also a related but separate debate about how many of the two companies’ paying subscribers are active users, as opposed to passive (or “zombie”) users who get a free subscription as part of their monthly mobile tariff (for example) – something that’s going to be discussed a lot more in 2014, I suspect, as Deezer, Spotify and their rivals continue to compete for telco partnerships.
Update: The Financial Times is already exploring this very point, with a startling suggestion that Deezer’s 5m subscribers include “an undisclosed number of subscribers to bundled telecoms deals who have not activated the service” and reporting that “people close to the company told the FT that about half of them were inactive” – ‘them’ being the 5m.
Finally, the really important numbers are going to be the industry revenue figures for 2013 as a whole, when they’re announced by the various bodies in the early months of 2014. Deezer and Spotify are both growing, but we’re waiting to find out more on what this means for overall industry revenues for rightsholders and – by extension – for artists.
I posted a shorter version of this analysis as a comment on the DMN article, but thought it was worth expanding on here.