Spotify. Where are you? That’s the question I pondered a few months back. Spotify has since arrived and I for one am hooked.
Spotify launched in the United States in the middle of the summer, making millions in legal music available to listeners. Many people noticed, and along with it’s release came the critics. While in the US Spotify is only a few months old in Europe the company is in its third year of operation. At a time when more music start-ups fail than succeed, that’s quite impressive. The critics aren’t all that impressed. In its short time indie labels are protesting Spotify, saying that the model isn’t financially sustainable for indie labels. Will Spotify pay up? Apparently it has – Spotify released a statement last month that in just three short years, where they were mostly operating in Europe, they have already paid over $100 million to labels and publishers. IFPI figures actually showed that Spotify was the second largest source of digital revenue for labels in Europe. Impressive for a little start-up.
Currently, users of the free Spotify accounts can listen to anything they want from the database, as many times as they want, with advertisements in between. The free trial lasts for 6 months. So what happens after? You can still access Spotify, but with a few restrictions. Listeners will only be able to play each track 5 times, and will only be able to listen for 10 hours a month. The move has worked well in Europe were restrictions are already in place. In March, when there were free restrictions, 17.8% of the active user play was paying users. By June, when the restrictions were in place, 32.9% were paying users. Sure they lost more than a million free users, but they also gained more than half a million paying users. It’s left to see what will happen in the US once the restrictions are enforced. Analysts however feel that once their financial-year-ending reports are released, Spotify will have turned a profit. Isn’t that the goal of all start-ups – to turn a profit within three years?
Are you using Spotify? When the restrictions are in place – will you begin paying for a subscription? I sure will. Having an artist’s entire catalog available to me at the click of a mouse is amazing.
References:
Spotify Payouts Top $100m as it Responds to Indie Label Critics
Exclusive: Spotify Subscriptions Surged to 1.5m After Free Service Restrictions
