Can Spotify Keep Growing?

Spotify today announced it had reached 15 million paying subscribers and 60 million total users. It continues to feed the same narrative that the company has been pitching to the industry recently:

  • The company is growing like a weed
  • The ratio of paid subscribers to free users remains stead at 25%
  • It provides enormous amounts of money to the industry that should be flowing to artists

Spotify’s growth is impressive. Outside of the year the company failed to update us on their sub numbers, the company is averaging 18.5 percent increase in both subs and users quarter over quarter. I’m assuming the company didn’t announce for a year as it appears the growth had slowed. But it has picked up again.

If the company can continue the momentum, it will hit its self-proclaimed goal of 30 million paid and around 120 million free users sometime early in 2016.

It is not clear how much Spotify’s growth is because of inroads in each market and how much is due to launching in new countries. The company recently expanded into Canada, which has been fairly barren when it comes to on-demand music services. The service is now available in 61 countries and their territories (hello unlimited free music Guam).

If the company is finding success launching new countries, it’s good news. There’s plenty more expansion to go if the company is to deliver on its promise in becoming a worldwide platform of music listening.  Unfortunately, the easy countries are out of the way.

Now comes the hard part.

Spotify will have to roll out in countries that might not want the competition (India or China), have yet to fully embrace digital (Japan), might not be able to afford the pricing model (most of Africa) or have a combination of all these factors and Vladimir Putin as president, ahem. How Spotify navigates these thorny issues, along with staving off new competitors like Apple and YouTube, will go a long ways toward determining its success.

Meanwhile, I’m sure these numbers mean Spotify’s IPO apparatus will start to crank up. Based on how hot the market is right now, I would expect the company to go out as soon as it can–before the bubble bursts.

3 thoughts on “Can Spotify Keep Growing?

  1. You’re right, Jon. Spotify’s growth is impressive.

    Can they keep it up? I think so.

    Sometimes the simplest explanation says it best. Spotify is up big-time because music streams are up big-time. And the #1 place for music streams is Spotify.

    Nielsen SoundScan says people accessed over 164 billion music streams last year, up 54% from the year before. What’s more, the number keeps surging. People streamed about 24 billion MORE songs in the second half of 2014 than they did in the first half.

    As long as Spotify can stay ahead of Google, Apple and the rest of the competition, Spotify will continue to ride the wave. So far, Spotify is doing a good job of staying ahead.

    1. Thanks for the comment. Maybe, maybe not. Not exactly sure if the gain in streaming is across the board, or is it powered specifically by Spotify. My guess is the majority of the audio stream increase has been due to Spotify, and yes, that’s been impressive. However, if Spotify’s growth slows, then the growth of streaming increases will slow as well, as Spotify makes up a majority of audio streaming. Granted, you are correct that streaming growth goes beyond just Spotify. Video on demand streaming is up significantly, too. Just not at the rate of Spotify. So we shall see.

      1. Jon, Spotify’s subscriber gains could have happened without much of a gain in music streams. People could have just paid 99¢ to stick their toe in the water a few times. Alternatively, the gain in music streams could have happened without new Spotify users if existing users just streamed more.

        While correlation is not causation, the fact that both gains happened together, and happened bigger than ever before, is significant. The 24 billion streaming music surge suggests that all those new Spotify users are not just dipping their toe in the water, they are all-in and loving it. This appears to be Spotify’s game plan: (a) keep capturing users and (b) count on them to fall in love with streaming music.

        Right now, Spotify’s game plan looks unstoppable. But could competition from the biggest names in tech, Google, Amazon and Apple, interrupt it? As you say, we shall see.

        You have an excellent blog, Jon. Keep up the good work.

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