The significance of Spotify’s 40m subscribers milestone


While much of the music industry’s attention was on Brussels yesterday as the European Commission announced its proposal for copyright reform, Spotify CEO Daniel Ek offered a powerful distraction by announcing his company’s latest milestone: 40 million subscribers.

Later in the day, Spotify confirmed another milestone to Music Ally: $5bn of payouts to music industry rightsholders since Spotify launched in 2008.

The 40m figure is significant, because it represents a noticeable growth spurt for Spotify in 2016. 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.

Spotify is now adding nearly 1.7 million new subscribers a month, up from one million a month in the first half of 2015. The obvious comparison is to Apple Music, which grew from 11 million subscribers in mid-February to 17 million in mid-September: a rate of just over 857,000 new subscribers a month.

Spotify is accelerating away, although a more Apple-positive take on the situation is that it took Apple Music a year to reach the same subscribers total (15 million) that took Spotify just over six years to reach.

There’s a bigger picture here. In 2016 so far, Spotify and Apple Music combined have added around 20 million paying music subscribers, in a global streaming market that according to the IFPI, ended 2015 with 68 million subscribers.

A positive thought: it’s quite possible that the industry will end 2016 with more than 100 million people paying a music subscription globally.

A less-positive thought: if the majority of this growth is coming from Spotify and Apple Music, what does it say about the performance of their rivals?

Every time the big two announce a new milestone, it should throw more attention on what’s happening to the figures of mid-sized independent services Deezer, Napster and Tidal, and their long-term prospects.

More optimistically, Pandora is preparing its on-demand expansion; Amazon is mulling a standalone service; and SoundCloud Go and YouTube Red are still in their early rollout phases.

There is no shortage of potential new challengers in the subscription market, which is good. A two-horse streaming race might be better than iTunes’ dominance in the downloads era, but the industry must encourage more horses to gallop out of the paddock.

Written by: Stuart Dredge