Peter Kafka

Recent Posts by Peter Kafka

Spotify’s U.S. Score So Far: 1.4 Million Users, 175,000 Paying Customers

That Spotify invitation you scored may be a little less rare than you thought. The streaming music service has already signed up 1.4 million U.S. users for its free trial, according to a source familiar with the company’s operations.

At least as important: Spotify now has 175,000 paying U.S. subscribers, less than a month after it finally opened its doors in America, says the same source. Last week Billboard cited a source who pegged Spotify’s U.S. user total at “at least one million.”

That’s a conversion rate — crucial to both Spotify’s business plans and to the big music labels — of 12.5 percent. Not quite as good as the 15 percent rate that Spotify reported in its home base of Europe last spring.

On the other hand, Amercian users have less incentive to pay for Spotify than Europeans do — during the company’s six-month launch phase, the U.S. version of the free service gives users more music than the European one does. The main reason to upgrade to paid is to get access on iPhones and Android handsets, for $10 a month.

In any case, it’s still hard to gauge what the numbers mean — it’s very early, and there has been a lot of hype.

Still, for context: Spotify reports that it has 1.6 million paid subscribers in Europe. And last month Rhapsody, the biggest digital music subscription service in the U.S., said it had 800,000 paid subscribers. (Sirius XM has 21 million subscribers, but the satellite radio service isn’t an apples-to-apples analog with Spotify et al; closer to a pear.)

Meanwhile, Rdio, a U.S.-based Spotify competitor hoping to capitalize on Spotify’s wave of publicity — or at least not get drowned by it — has made an interesting move: It is going to continue marketing its service via Apple’s iTunes, while raising its prices — for customers who sign up via its mobile apps — from $10 to $15 a month in order to comply with Apple’s new subscription rules and fees.

Most other subscription services — including Spotify and Rhapsody — have gone the other route, by taking down subscription links from their Apple apps, but keeping their pricing intact.


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