Analysis

Spotify sets sights on ‘close to 100m’ users by Christmas


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News that Spotify is aiming to be nudging 100m active users by the end of 2015 shouldn’t come as a massive surprise. The streaming service reached 50m by early November 2014, then 75m by early June 2015. If that growth rate has continued, you’d expect the 100m figure to be hit sometime in January 2016.

Even so, Spotify is already anticipating the milestone, with its chief revenue officer Jeff Levick telling an advertising conference in New York that “close to 100 million” people will be using the service by Christmas.

The timing of his public comments, as Apple Music’s initial three-month trial ends, appears no coincidence. Talk of Spotify’s upcoming nine-digit milestone will remind the music industry that if existing conversion rates are holding steady, Spotify will likely end 2015 with more than 25m paying subscribers. Although given that Levick was speaking to an audience of advertising executives, the emphasis may be just as much on the 75m free listeners – and how Spotify can make more money out of advertising to them.

There was some news on that front yesterday, as Spotify confirmed its partnership with Google to stream via the company’s Chromecast Audio device, which turns normal speakers and hi-fis into Wi-Fi equipped streaming hubs. It will also be available through the existing Chromecast device, which plugs in to TVs.

Like its existing PlayStation partnership, Chromecast Audio is part of the wider Spotify Connect scheme. But as AdAge reported yesterday, whereas some Connect integrations are only for Spotify’s premium users – Gramofon being one example – both the PlayStation and Chromecast deals will be different.

“People who listen to Spotify’s free, ad-supported service are able to stream songs on PlayStation and will be able to do so on Chromecast because Spotify is connecting its ad business to those devices,” explained the report. “Spotify will be pooling listeners of its free, ad-supported service on Chromecast and PlayStation into their own respective ad-targeting segments.”

With 5m downloads of the Spotify-powered PlayStation Music app and 100m listening hours so far, that could be meaningful – especially as advertisers will be able to also target ads (e.g. ads for new games) to those users when they’re listening to Spotify on their other devices too.

The debate around Spotify and freemium within the music industry tends to focus on conversion rates to premium subscriptions, with ads seen more as a spur to upgrade, if people are keen to stop hearing them. Some rightsholders may be spooked by the idea of Spotify Connect moving beyond a premium-only experience, then.

But with free listening here for the long term in the streaming market, proof that Spotify is trying to innovate within its advertising business too should be welcomed by the industry. There is plenty more that can be done to make ‘free’ streaming pay off for the music business and its creators.

Stuart Dredge

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