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The significance of Spotify’s 40m subscribers milestone


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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.

Stuart Dredge

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