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Spotify hits 10 million paying subscribers

First published on www.buffalonews.com

Spotify, the streaming music service, said last week that it had grown to 10 million paying global subscribers, a long-awaited disclosure as the company faces potential competition from Apple and also prepares for a probable initial public offering.

The numbers show rapid growth for Spotify, which offers access to millions of songs for about $5 to $10 a month, or free with advertising. The company, which is privately held, has doubled its customer rolls since December 2012, when it reported 5 million paying subscribers and 20 million active users in total.

That ratio of three free users for every paying subscriber has remained steady throughout Spotify’s recent history. The service was introduced in Sweden in 2008 and came to the United States almost three years ago. When the company last reported customer numbers, in March 2013, it had 6 million subscribers and 24 million total users. On Wednesday it said that its total had grown to 40 million. Last month, Spotify announced a deal with Sprint to bundle its service with phone plans.

“We’ve had an amazing year, growing from 20 markets to 56 as people from around the world embrace streaming music,” Daniel Ek, Spotify’s chief executive and co-founder, said in a statement. “Ten million subscribers is an important milestone for both Spotify and the entire music industry.”

Among Spotify’s many competitors are Rhapsody, Rdio, Deezer and Google Play Music All Access, and it may soon face a major challenge from Beats Music, an affiliate of the successful Beats Electronics headphone brand. Beats, which opened in January, is still small, with only about 200,000 users, according to industry estimates. But news recently emerged that Apple was in talks to buy Beats’ audio brand and music service for $3.2 billion.

Neither Beats nor Apple has confirmed those talks, but an alliance between those companies could put tremendous pressure on Spotify, which has been the biggest player in subscription music.

The music business has started to see streaming as its salvation, as both CD and download sales decline rapidly. Last year, global download sales fell for the first time, by 2.1 percent, and in the first quarter of this year U.S. downloads were off by 13.3 percent compared with the same period last year, according to Nielsen SoundScan.

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