Spotify rockets to 15 million paying subscribers

Spotify rockets to 15 million paying subscribers

Business Insider

Stockholm (AFP) - Swedish music streaming service Spotify said it has now 15 million paying subscribers, boosting claims that its revolutionary and controversial model can work.

The expanding startup said late Monday it had added 2.5 million subscribers since November amid widespread reports that the unlisted company plans to go public.

"It's been an astronomic amount of growth in a short period of time," Mark Mulligan, a music industry analyst, told AFP, adding that various discount packages explained the surge.

He said this does not mean the service will keep up that kind of development, but said: "Spotify did everything it could to get right growth at the right time."

At the end of 2014, Spotify said it had 60 million users of whom 15 million were paying subscribers, compared to 40 million active users and 10 million subscribers in May 2014.

The streaming service has become a major powerbroker in the music industry since its US launch in 2011, drawing criticism from stars like American pop star Taylor Swift and propelling lesser-known artists into the spotlight.

Spotify's two-tier service lets users stream an extensive catalogue for free with advertising, while those who subscribe pay eight to 11 euros (nine to 12 dollars) a month for ad-free music listening.

Mobile and smartphone users, however, have to pay to be able to choose tracks.

- Fierce competition -

Although the company says 70 per cent of its revenue goes to the music industry, it has come under fire for the share that ends up in artists' pockets.

In November, Taylor Swift pulled her catalogue from the service, citing low compensation.

"It's not something (artist payments) Spotify can directly influence, but they get the blame," Mulligan said. "Most of it lies with the rights holders, who have a big responsibility to be more transparent."

Spotify founder Daniel Ek replied to Swift's criticism on the company's blog, saying that his company provides an alternative to listeners downloading music online for free.

Monday's figures confirm previous reports that one in four Spotify users is a paying subscriber -- although the company reported $80 million in losses in 2013.

Reports of the streaming provider going public are widespread even though the company has yet to turn an overall profit.

"They wouldn't be the first loss-making music service to go public," music startup consultant Bas Grasmayer told AFP in an email, referring to US Internet radio service Pandora which went public in 2011.

With Google's YouTube Music Key on the market since November and Apple making no secret of its music plans, strong competitors are emerging for the Swedish startup, which declined to comment further on Monday's figures.

"The market is more competitive than ever," Mulligan said. "Spotify already have challenged economics, can they compete with Google and Apple? That's what potential investors will ask themselves."

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