Thursday, November 24, 2011

Spotify Delivers Pay Subscribers

Some 4 years ago we awaited the launch of Spiral Frog’s music streaming service but . Unfortunately when it finally it came to market it was littered with many industry issues and was still too early for the market. Spotify and Pandora have followed and those who have followed our writing will know we have long supported these services and the logical user model adopted by Spotify.

Many questioned whether users would just use the basic service and avoid the payment subscription service and whether the music industry would allow it into the US. Today Spotify has announced that it has now over 2.5 million paying subscribers and since its summer US launch it has grown from 1.6 million subscribers in June to day’s 2.5 million with revenue increasing over the last year from £11.3 million to £63 million with subscription alone delivering £45 million.

Spotify is still not into clear waters with losses growing from £16m to £26.5m. Even with the increased royalty and licence payments that cause the losses it is now possible to see growth and with it the potential to change the music model.

It is important that the media sectors recognise that models will have to change and that it is better to support legitimate players such as Spotify than cripple them and hand over the business to others who will not pay a penny. This shift to rent, subscription real-time and cloud based services on demand are perfect for today’s mobile world. The question is whether we will all see this or remain wedded to models that they have little future.

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