It is official, in the battle to win the online music streaming masses, Spotify has announced that they are the world’s first music streaming service to have 100million paying subscribers. This is big news for the Swedish firm as they fight for pole position with other tech giants Apple, Google and Amazon.
It has been quite a first quarter for the company, revenues are up by 33 percent to £1.3billion, and their losses are said to be at £146million. All in all much better than analysts had originally expected.
Spotify has racked up 100 million paid subscribers and 217 million monthly active users in total. Image: Spotify
Good news, yes. The question still remains though, will Spotify be able to hold off the other players in this ever-growing market? Apple Music is right behind Spotify’s heels and boast 50m subscribers, and has surpassed Spotify in the US. This has prompted the question will Spotify be pushed out of the top spot, or even worse, out of the game by Apple. This is obviously a huge worry knowing the vast resources at Apple’s disposal.
Spotify has been very smart in branching out into other types of media like podcasts and has also started a push to capture listeners in developing countries such as India as the competition for the market place has increased.
This, according to analysts has appeared to work, but the very same analysts also cautioned that Spotify cannot afford to rest on its laurels.
Because of their reach out to the global marketplace, Spotify still has double the amount of paying subscribers as Apple worldwide, but crucially, in the US market Apple has overtaken Spotify and that has to be of concern.
There is a serious battle for American listeners and Spotify are in the trenches, in a bid to win customers they are offering discounted subscriptions as well as bundles with video service Hulu.
Owning the American market would be huge but Spotify’s chief executive and co-founder Daniel Ek has said that he’s not worried by the opposition as there is more than enough potential customers to go round.
Ek explained: “We’ve always had competition. Competition has always come in the form of much larger players – that’s not unusual to us, yet, we keep on doing what we said we are going to do and keep on growing at more than 30 percent per year.” He added: “And the point with that, I think, is that the music industry market is just way bigger than most people realize.”
Don’t let Daniel Ek’s laidback approach fool you though, in Europe, Spotify has gone to war with Apple by filing a competition complaint against the iPhone giants.
The Swedish company claims Apple has abused its control of the iPhone App Store to the advantage of its own music service. Apple has vehemently denied the allegation.
The Spotify business model is based on the following: It has 217m users throughout the world and makes the majority of its income from its £9.99-per-month ‘premium’ subscription. This gives the subscriber access to its advert-free streaming service. Worldwide it currently has 100m customers paying for this service. Those who chose not to pay for premium must listen to advertisements in between songs.
As if Apple is not enough to worry about, Google and Amazon, are about to launch ad-supported versions of their music streaming services, and these new services will be compatible with their smart speaker devices. Users of the devices will no doubt see the Cinergy and could well use Google or Amazon as their main music streaming provider.
So, with Spotify having 100million paying subscribers it has for sure eased concerns that its bigger rivals would ramp up their services and leave them for dust. Quite the contrary, Spotify now forecasts revenue of up to £5.9billion for 2019, which is above analyst expectations of £5.8billion, and by the end of the year, they look to have 127m paying subscribers. Big numbers indeed.
Amazon, Apple, and Google will certainly have Spotify on its toes, but by the looks of it, the group seems to be holding its own in one of the most lucrative and highly sought after revenue streams in music.