Peter Kafka

Recent Posts by Peter Kafka

Spotify Toots Its Own Horn: One Million Paying Subscribers

Nope, Spotify still isn’t in the U.S. yet. But the European streaming music service does have something to announce. It has a million paying subscribers, CEO Daniel Ek writes in a blog post.

Truth in blog posts about blog posts: The number isn’t news. The company hasn’t disclosed the milestone before, but it tells me it passed the one million mark about a month ago. Which happens to be when I first noted it.

Still it’s a number worth boasting about. It makes Spotify the biggest paid music service in the world, by a large margin.

U.S.-based Rhapsody, Spotify’s closest competitor, has recently said it’s at the 750,000-subscriber mark. But newer players like MOG and Rdio are much, much smaller; Thumbplay had 20,000 subscribers before it gave up.

Spotify’s critics will note the service has an advantage its competitors don’t have — the ability to give listeners many free days of music every month, instead of the 3-day free trial the others usually offer.

That free music is also one of the big sticking points in the company’s negotiations to get to the U.S., which have dragged on for two years. The big music labels worry the free tunes will kill off what’s rest of their music sales, without a replacement revenue stream.

If Spotify takes much longer to get to the U.S., it may find the competition has gotten in ahead of it. Google is trying to launch its own music store along with a digital “locker” that will let users store all of their music in the cloud. That’s not as exciting as Spotify’s all-you-can eat offering, but it’s going to be a whole lot cheaper. Spotify would likely run about $10 a month in the U.S., where Google’s locker may be $3 a month, or less.

Meanwhile Apple is looking to launch a much more limited locker service of its own. That one would only allow users to access songs they’ve purchased from iTunes, which is a tiny subset of most peoples’ collections, but it’s still competition. And a yet-to-launch music startup called Beyond Oblivion has just raised a staggering $77 million from investors including News Corp. (which also owns this Web site).

Which is perhaps why the company is also disclosing some other numbers beyond Ek’s post. Paid subscribers are growing at 2x the rate of free users, says Kenneth Parks, who oversees North America for Spotify (the company has a small, but growing, staff in NYC).

Parks also says the million paying subs represent about 15 percent of Spotify’s active user base, defined as people who have used the service in the last 30 days.

That puts Spotify’s active user base at about 7 million. That’s lower than the 10 million registered user number it has previously talked about, but Spotify correctly argues that active users is a more helpful metric. It’s good enough for Facebook, among others.

Next task: Convincing at least one more big music label — specifically, Vivendi’s Universal Music Group — to give Spotify a U.S. distribution deal, so Americans can figure out if they want to pay up, too.


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