Spotify’s launch in the US has helped to boost its subscriber numbers by more than 400,000 in three months, according to its chief executive.
In an interview with CNBC to be broadcast in the US on Wednesday, Daniel Ek said that the digital music service now had “over 2m” paying customers, up from 1.6m in June.
The figure means that Spotify has doubled its subscribers in six months, a period which has seen it make a long-awaited debut in the world’s largest music market and introduce tighter restrictions on the amount of free listening available to those who do not pay €5 to €10 (£10 or $10) a month.
And that’s before it’s been plugged into Facebook’s much-hyped new music platform.
Mr Ek is expected to appear at Facebook’s f8 event on Thursday as the 750m-member social network introduces new ways to integrate Spotify and other digital media services, with users sharing the tracks they are listening to live on the site.
Spotify already allows users to share playlists and favourite tracks on Facebook and Twitter but the latest changes promise a deeper level of integration – promising a new viral lift.
But its US rivals MOG and Rdio, which are believed to have attracted a much smaller number of paying customers, have responded to Spotify’s arrival on their turf by unveiling new “free” services, a key differentiator for the Swedish upstart.
Spotify spent almost two years negotiating with record labels to ensure the free, advertising-supported element of its service was retained when it launched in the US. In Europe, that free service is limited to around 20 hours per month for the first six months of use, then tightened to 10 hours per month.
Perhaps in an attempt to ensure they can capitalise on the anticipated influx of new listeners, MOG and Rdio have both announced plans for a similar-sounding free service, although the details are somewhat vague.
A MOG spokesperson told the FT that there is a track-based limit to its promised “60 days of free listening” but declined to say exactly what it was. That limit can be lifted by watching more ads or making playlists.
At the same time, Spotify is facing renewed complaints from independent record labels about the payouts their artists receive from the service.
Three small metal labels have pulled their content from Spotify in recent weeks citing the “fractions of pennies” they get paid per track played on the service and the cannibalising effect on physical sales in markets where it is available.
Spotify says in response that it is “not a unit-based business”:
“Spotify is generating serious revenues for rights holders, labels, publishers and the artists that they represent. We have paid over $100m to rights holders since our launch, and the overwhelming majority of our label partners are thrilled with the revenues we’re returning to them. Spotify is now the second single largest source of digital music revenue for labels in Europe, according to IFPI.”
Such complaints – and concerns about the sustainability of its business model if free users outweigh paying customers – have dogged Spotify for years but so far, both its catalogue and its subscriber numbers have just kept growing.
Being thrust into Facebook’s spotlight may finally prove whether the economics of Spotify’s business really can scale.
