Three years ago, Spotify had 10 million paying customers. So, in three years, which is the same amount of time since Apple bought Beats and Beats Music, they've added about double the number of subscribers Apple has. The past year, Spotify has added 20 million paying users, only seven million less than Apple has in total.
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Spotify Hits 60 Million Paid Subscribers Ahead of Going Public
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Three years ago, Spotify had 10 million paying customers. So, in three years, which is the same amount of time since Apple bought Beats and Beats Music, they've added about double the number of subscribers Apple has. The past year, Spotify has added 20 million paying users, only seven million less than Apple has in total.
Maybe you are right. I have nothing against Spotify, but I just don't trust those numbers.
When Spotify goes public then we will have better figures. I'm not saying you are wrong, I'm just saying I don't know if you are right.
So far it doesn't look like Apple Music will ever catch up to them. On the contrary, Spotify is growing a bit faster:
From: http://www.businessinsider.com/apple-music-vs-spotify-subscribers-chart-2017-6
To be fair though Spotify, and lets call them the 'founder of streaming'...they weren't but you know what I mean, started 11 years ago in 2006.
Apple Music streaming service started 2 years ago in the Summer of 2015 so apple are doing okay 'thank you very much'...don't write them off especially with Homepod (closed to Spotify no doubt) on the horizon.
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When Spotify started, it was a different world. The smartphone "revolution" hadn't happened yet, and there were no affordable data plans that supported music streaming. They pioneered the market, but it really only took off a few years ago. If Apple had jumped on the bandwagon earlier they would probably be the market leaders now. But they didn't (probably because they were concerned about cannibalizing iTunes sales), and that's why Spotify is where it is. I don't think they are in danger of losing their lead anytime soon. Taking away market share is difficult in this market (once people have built playlists, it's hard to get them to switch).
This could also play the other way around assuming the Homepod will not have a Spotify app ...
There is actually a lot of funny accounting going on, which is why they are not having an IPO – they are going public, but it is not an Initial Public Offering which has more disclosure requirements. Spotify is free with a whole bunch of carrier subscriptions, where they only get a couple of dollars a month from the carrier – these are counted as paid subscribers. They also count the $0.99 3 month trial as a paid subscriber.
Quite a few analysts have been openly bearish on Spotify, and their dilemma is that nobody wants to buy them (Google and Amazon already have subscription services). Going public will be a way to attract additional capital, but they are struggling badly at the moment.
I do feel a little bad for them, since they effectively invented the category, but when companies like Apple, Google, and Amazon all move into your market category, your chances of surviving long-term against their cash hordes are slim…
I'm skeptical about the numbers. I read that article from BI, it linked me to statista, which did not clarify if those paid accounts are even active.
I may be wrong but something doesn't seem right with Spotify' numbers.
Spotify has a much superior desktop version, while the mobile feels like a chore.
Too bad we cant get the best of both worlds. If AM made a better desktop version I would switch over.
Too bad we cant get the best of both worlds. If AM made a better desktop version I would switch over.
Not sure what you are trying to say. Why would anyone pay for a subscription they aren't actively using? According to Spotify, they have 140 million active users, and of those 60 million are paying subscribers. Seems pretty unambiguous to me.
Both the Spotify and Apple numbers come from the companies themselves. Any particular reason for not trusting either of them?
Spotify has seen explosive growth since Apple Music launched, which is counterintuitive unless Spotify also had a service or product revamp (they didn't). When they realised how quickly Apple Music was starting to grow, they started doing things like counting the $0.99 3 months trial as a paid subscriber. If you do a little research amongst financial reporters (BI is not a great source for financial reporting), this explosive growth got a lot of people to pay attention to the underlying figures. The short answer is that nobody in the financial community trusts Spotify's paid subscriber numbers anymore.
It reminds me a bit of my favorite store, years ago called 'Borders'. https://en.m.wikipedia.org/wiki/Borders_(UK)
You walked in and were met by this wonderful aroma of new books and freshly ground coffee.
Borders had a Starbucks concession within the store, all very nice, very nice.
Except when Borders went bust the Starbucks concession within was lost also.
Here lies the problem in business you can't rely 100% on someone else.
Spotify has to much reliance on other companies, a Spotify smartphone or Spotify Echo is to late.
If Amazon, Google or Apple pull the plug on Spotify then they and importantly their staff will feel like that Starbucks concession... there is no overall control with Spotify they are too reliant on 'someone else'.
I subscribe to Spotify, Apple Music and YouTube Music via YouTube Red. I guess I'm trying to make up a little for all my illegal downloading. I don't have the patience to use Apple Music though. It's always too slow. Plus not having gapless playback detracts from the listening experience. Plus Apple replaced a lot of my owned songs with other versions via Apple Match - thanks very much for that. I know that's a side issue. But Spotify is the best music service by far, in my opinion. Being restricted to three or four devices for offline storage seems a little churlish in these days of many devices.
That's a boring first paragraph, I know. But here's my big idea.
Instead of taking my monthly subscription and spreading it across all artists who get played by all subscribers, I'd like Spotify and Apple Music and everyone else to give my money to only those artists that I play in each particular monthly.
That would give the artists I listen to a lot more money.
Am I right? Can you make that happen? Thanks
That's a boring first paragraph, I know. But here's my big idea.
Instead of taking my monthly subscription and spreading it across all artists who get played by all subscribers, I'd like Spotify and Apple Music and everyone else to give my money to only those artists that I play in each particular monthly.
That would give the artists I listen to a lot more money.
Am I right? Can you make that happen? Thanks
At the same time, Spotify has grown massively over those 2 years. Apple Music is good, but it's not radically different from Spotify. iTunes was the biggest music store in the world (and probably still is), and the world was waiting for Apple's reaction to this new state-of-the-art. You never know with Apple - sometimes their products are mostly the same as what's out there, and sometimes they pull something radically different out of the hat. When Apple Music launched, and it was basically not very different from Spotify, it legitimised their product direction. It's probably the best thing that ever happened to Spotify.
That's not to say that Apple Music is a Spotify-clone. Apple leveraged their best asset - their size, brand, and relationship with artists to create Beats 1, which remains Apple Music's biggest differentiator. I quite like it, too - especially the guest shows from Dr Dre, Frank Ocean, Elton John, etc (e.g. http://www.eltonjohn.com/eltons-100th-rocket-hour-radio-show-airs-this-week/). It's all about music discovery, and I like how Apple is trying to do something different, with a more personal touch.
Spotify's biggest strength is its social networking. Apple is still scarred by Ping. That said, I don't think Spotify's social features are really good enough at all. They don't integrate it in to music discovery well enough - it's more about sharing playlists (or at least that's how it used to be when I was a subscriber).
I think the biggest threat to Spotify would be if Apple took a look at what's happening in the video-streaming market and created some kind of subscription to rival Amazon Prime. There are lots more areas where Apple can add value to peoples lives through that recurring revenue (e.g. bundling some iCloud storage, AppStore discounts, iTunes movie rentals, etc).
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They are forced to go public or they pay 1% more in interest, not good, in fact smacks of desperation here.
https://www.musicbusinessworldwide....to-2018-it-faces-some-serious-financial-pain/
"the $1bn investor group successfully fought for a 5% annual interest rate – which would increase by 1% every six months thereafter should Daniel Ek’s company fail to IPO.
Painful, whoever signed off that Spotify deal, Daniel?, must be mad, ...or desperate.
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Hence I've been saying for a while, I don't see it being an independent company for long given the margins are so low even if you lowered the outgoings to the absolute minimum it would require the sort of long term growth rates that are next to impossible to sustain. The big question is who will buy it and whether those licences they own are sustainable or whether Spotify will expand beyond their existing model to include video and spoken books as part of their offerings to increase their presence. Keep in mind that Spotify's competitors are generally part of larger organisations who in turn have deep pockets and happy to run their division at a loss leader if it means that it drives sales somewhere else such as Apple, iOS devices and Apple Music subscription.
apple music has an interface issue. otherwise, their service is better than spotify.
spotify doesn't have cloud libraries. so i have to manually load music (music not available on spotify) to my devices
spotify doesn't have cloud libraries. so i have to manually load music (music not available on spotify) to my devices
If someone signs up for a free trial of a premium subscription and never pays when the trial is up, would that not count as a paid account, even though it is not active? There is the potential for a lot of number trickery from Spotify. Apple can do the same but not to the same extent. When Spotify goes public I'll start to listen when they talk numbers.
I'm sure, well I hope Daniel Elk will be transparent, but I too wonder about how the 60M is made up....
Here in the UK Vodafone offer free Spotify as part of talk time. How much does Spotify gain from this, very little I expect.
Also as you say, I'd like to see the % uptake of the 99p three month trial customers, and whether this is included in the 60M. As many may drop out at the end or before the promotion expires.
I'd like to see 'churn' rate also.
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Don't forget that they just started a 3 month "paid" subscription trial for $0.99 1-2 months ago. Now we know why. It was my first time joining as well. And I don't plan on renewing.
I'm a Spotify user who would switch in an instant to whichever service could promise this. There are months where I get caught up listening to podcasts (in a podcast app, not Spotify). I may only play 1 album once in the whole month. I wish that band got $7 from me after Spotify fees. Instead, that band probably got less than 7 cents and all my money went to Justin Bieber and other pop stars whose fans are listening around the clock.
The current system penalizes artists that cater to an adult audience. We're busy and we don't have the stamina of the younger audience to rack up the play counts on the artists we listen to.
When I was a kid, I'd watch movies on VHS until the tape wore out. Today, I still buy movies on BluRay but maybe I'll watch the movie twice ever... and mainly buy for special features.
Edit to add: if movie theaters went away and movies switched to a Spotify model of equal pay per stream, most movies would become 20 minute cartoon shows like Dora the Explorer. Things kids watch on a loop.
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From my experience -- there are two things Apple Music does better: 1. Apple Music allows for a much larger library than Spotify. A large library allows for pleasant shuffle play where everything that comes up is something one likes or at least has chosen. 2. The sound quality is, to me, very slightly better in the higher frequencies (based on my own AB comparisons with my relatively high end headphones) keeping in mind that my 68 year old ears roll off rather sharply at about 8K, and sound quality perceptions are highly individual.
My iTunes purchased collection is fairly small so I didn't mind it being jerked around a bit by Apple Music -- but this is a very real concern that Apple clearly has not yet addressed fully -- and very appropriately mentioned in your post. Finally, Apple Music reportedly pays musicians more generously than Spotify -- which is to me very important.
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I couldn't care less about the music industry i.e. the record producers, but think twice about pirating, as that (along with Spotify) really short changes musicians, without whom there would be no music (or music industry).
What's crazy is that Apple DOES pay more than Spotify, but even on Apple you'd still have to listen to your own artists for over 100 hours in a single month to give them your full $10 fee in streaming royalties. Otherwise you are subsidizing the listening of other users.
That was based on songs being 4 minutes long and some figures from June 2017. Spotify pays .0038 per stream. Apple pays .0064. Tidal pays nearly double at .0110.
Also, my math may be totally wrong... these numbers are so small that it hurts my brain.
Given Apple Music is pre installed on every apple idevice and pushed, I would not be worried if I was Spotify.
Spotify will start to worry if apple were to remove eddy cue and stop focusing on hip hop.
I'm no expert in running or investing in a Dot Com business, but amazon a company I've followed and admired since '96 who started in '95 took 6 years to make a profit - 2001.
If you and I invested £1000 in amazon at IPO stage I don't think we would be toonow!
If I understand correctly... Amazon didn't post a profit in the early years because they spent every dime they made on expanding their business. They made a profit... but they invested that extra money back into themselves. That was a choice they made... and it worked out for them.
Spotify doesn't make a profit at all because it costs them MORE to acquire the music than the money they get from customers. They don't have a choice. There is no "extra" money to play with.
For instance... if Spotify gets $3.1 billion in revenue... it actually costs them $3.5 billion to pay the record labels for royalties and to run their company. (a $400 million loss)
And those losses have gotten bigger every year... despite their growing userbase.
In short... Spotify's business model is broken. Would you agree?
There is no opportunity for Spotify to make a profit when their costs exceed their revenue. And simply adding more users hasn't helped in the 9 years they've been around.
While Spotify is now up to 60 million paying customers... they also now have 80 million free customers. That's a big part of the problem.
If Spotify got rid of the free tier... they might be able to make a profit. Who knows.
Or... maybe streaming music simply isn't a profitable business because of the insane royalty costs.
Apple, Google, Amazon and Microsoft could afford to lose money on streaming music because they have other profitable businesses. And they would just use streaming music as a "value add" for their other products.
But Spotify's business is streaming music. They don't have anything else to fall back on.
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