Spotify has 1 million paying users

Music streaming service Spotify has 1 million users that pay monthly for listening to music. In addition, Spotify reports that the number of paying customers grows twice as fast as the number of free users. This news has been posted on Spotify’s weblog this week.

Spotify demonstrates that it is possible to set up a successful service around paid legal downloads and streaming nowadays. CEO Daniel Ek said that approximately 15% of Spotify users around the world are now paying subsribers.

Spotify has issued more than 10 million accounts. In addition to active users that pay for listening, there is a category of free users and there are several million people who have created an account but are no longer active. The total number of active users –including the 15% paid subscriptons- is now around 6.7 million. Spotify offers extra service to its paying customers: they can enjoy music without commercial breaks and have higher quality footage.

Although Spotify is now becoming the biggest music-streaming service on the web, they are still struggling to convince American record labels to embrace their freemium model. At first sight, the entertainment industry is probably happy with the emergence of online business models that allow producers and/or copyrightowners of music to collect some revenues. However, many record labels do not endorse the strategy of offering their products for free, supported by advertising revenues. They are especially hesitant to try this in the United States: the largest music market in the world. The reason is simple: we don’t know yet whether this business model has enough potential to make a living for the industry.

Since the number of paying users is allready increasing twice as fast as the number of free users, it is interesting to speculate on what would happen if the major record companies would cooperate with Spotify in the U.S.. The choice of offerings would then be much broader for U.S. customers and perhaps that would make it more appealing to new customers to try a paid subscription.

Sources:  Spotify,  BBC News