Spotify Now at Over 10 Million Paying Subscribers Globally
Posted by Jeffrey Harris on 05.21.2014
Over 3 million in the US…
Billboard reports that Spotify's subscriber base has grown to over 10 million globally, driven by mobile usage. According to sources familiar with the company's data, the streaming music service has grown to more than 3 million paying subscribers in the US in less than three years since Spotify launched in July 2011.
As of last March 2013, Spotify revealed that they had 6 million paying subscribers globally. One key part of Spotify's strategy is offering free access to various levels of their service. Additionally, SPotify has more than 40 million monthly active users including the 10 million paying subs.
Spotify chief executive Daniel Ek said of the news, "This shows that our conversion rate is working. We're proving the more people play, the more they'll pay."
There has also been talk about an initial public offering for Spotify for later this year. The company is now said to be valued at more than $4 billion with its last private funding round in November.
Ek said Spotify's rapid growth was boosted by their new free mobile service last December. He stated, "We've really become a mobile-first company." According to Ek, more than 80% of all subscribers sign up now through their mobile phones.
However, the growth of licensing fees, which rise through fan usage, means that Spotify hasn't been able to turn a profit yet as the company ramps up. This could be a potential red flag for investors, but many will likely focus on the subscriber growth.
Another problem is that subscriber numbers will not grow fast enough to make up for the slowdown of song downloads, which are down some 13% compared to a year ago. US paid subscription revenues rose 57% to $628 million last year. Subscribers rose 81% to 6.1 million, per the RIAA.
Universal Music Group also recently said in their first quarter financials that sales dipped by 2% because despite the growth of streaming services, it was unable to offset downloads' decline.
Besides Spotify, Apple is also keen on entering the streaming music service market.