Spotify Hits 4 Million Paying Users

Sites include Spotify.com . Published on August 20th, 2012. Written by Anthony West.

Streaming music provider is moving up in the world—fast! It is barley 12 months since the service launched in the US and already it is amassing a large pool of paying customers.

The company is announcing 15 million active members with over 4 million of those members coughing up cash for its premium services. The belief among onlookers was that Spotify wouldn’t be able to command any attention among music buyers given the widespread availability of so-called ‘free’ music.

But the way Spotify has positioned itself has helped recruit many members who not only enjoy music, but enjoy paying for it too. In Europe the music listening public is also more of a music buying public. Not necessarily the case in the US, so the fact that people have taken to the service is strong testament to the pulling power of Spotify’s positioning.

Spotify may need a little more than 4 million paying customers in order to turn a profit though and that is the challenge. Presently the company uses the ‘freemium’ model with the hope that it will build a large enough pool of users who eventually get out the credit cards. The present 27% conversion of free to paid will need to inch closer to around 40% for the numbers to really pay off.

It’s just 12 months stateside so Spotify still has time. It also has the added benefit of still being in private hands, and private investors are bit more patient than investors in public companies.