10 million users have tuned in to Spotify so far, but only 1 out of 20 pays for it

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Spotify is going to announce that it’s hit the 10 million users milestone later this month, according to a “special party” invitation sent to press and partners (image and source: Music Ally). That’s about the same amount of users as there are tracks in its vast music catalog, to put things in perspective.

As you’re no doubt aware, Spotify’s availability is limited to seven counties across Europe, namely UK, Finland, Norway, Sweden, the Netherlands, France and Spain, so it’s not a bad number to boast about.

On the other hand, there’s no indication at this point if that means there are 10 million active users rather than 10 million registered users, which makes a world of difference.

Perhaps we’ll learn more at the event (provided we get a “special” invite, of course).

Last July, Spotify founder and CEO Daniel Ek told Music Week that it had attracted 500,000 users to pay for a premium account (they come in two flavors, actually, with desktop access for £4.99 per month and desktop and mobile access for £9.99 per month). That’s up from 320,000 paying subscribers back in March 2010. Going up, but is it going up fast enough?

Give or take, that means roughly 5 percent of its user base is currently paying for the product, which means there are about 9,500,000 people streaming up to 20 hours of music per month only and putting up with in-stream ads, although no doubt some are simply no longer using the service (anymore).

There aren’t really any solid industry benchmarks to flat out say conversion rates are disturbingly low, but it seems to me that they should be able to double the percentage of paying subscribers. No doubt, the labels would like to see that percentage go up, too.

Maybe a U.S. launch would trigger higher conversion rates, or maybe not, but either way we’ll have to wait until 2011 (or who knows, 2012) to see if that will be the case. And they’re up to some stiff competition in that part of the world too, with giants like Apple, Google, Amazon and even HP duking it out along with startups such as Rdio and MOG.

But don’t let that get in the way of celebrating the 10 million users milestone, Spotify. Clearly, a lot of folks across Europe are listening to you, even if most are doing it for free.

(Hat tip to Stuart Dredge)

  • http://www.scmagazineuk.com Dan Raywood

    I have been a Spotify user for around a year and find it to be more practical and easier to navigate than MySpace, and without the battery-draining limits of iPhone radio apps.

    Through it I can listen to old and new acts, find related artists and listen to entire albums. ‘All Mod Cons’ for a free listen? Yes please! Okay so there are the occasional adverts on the free service, but if paying for it is only going to remove that, I am happy being a cheapskate.

  • Iralie

    And those of us lucky enough to get an account at the start can listen for free, with adds, for as many hours a month as we like.

    The £10/month is still a little steep though, but that’s more due to how poor quality most phone sound is than Spotify.

  • http://www.weirdwebblog.co.uk Dave

    I wasn’t too keen on the streaming model but decide to try out a premium subscription for a month and I haven’t looked back.

    the mobile device (iPod, Android phone) offline caching is what really makes it. I can try out 10 new albums a month for £10, and if there are any that I really can’t live without I buy the MP3s.

  • BB

    I know i’m not alone when I say that I never understand why and how TechCrunch decides to be positive or negative about startups. Robin, 5% conversion is not bad so stop being negative for no reason.

    • http://techcrunch.com Robin Wauters

      I’m not positive about Spotify, nor am I negative. 5% conversion is low, attracting 10 million users is quite impressive.

      • Sean

        5% conversion rate is pretty much considered “the benchmark” for a successful freemium service. So if you ask me, which you didn’t, but here I am anyways – I think they’re doing just fine.

      • http://techcrunch.com Robin Wauters

        Fine for whom, though? Spotify? Its investors? Other stakeholders? The music labels licensing their content?

      • Steve O'Hear

        You are making a big mistake to compare the 5% premium rate to other freemium-based startups. Because, as Robin alludes to, Spotify’s free offering doesn’t become incrementally cheaper with scale as other SaaS do. For *every* single track that is streamed, it costs Spotify cash. Therefore they probably need to sell a bucket load of ads at a good CPM or convert more to paying customers. Likely the latter.

      • MyHinky

        Industry standard considers 1% to be where you should be aiming. 5% is NOT low. Embarrassing that you don’t know this.

      • http://techcrunch.com Robin Wauters

        There is no ‘industry standard’ for the model Spotify and other music startups are pioneering. Early days.

      • Ric

        If there is no industry standard how can you say so confidently that this is low? Labels will always say it’s low until they get 100% so they’re not a good indicator.

      • BB

        I’m sorry but you are wrong. 5% is very high for this model.

      • Michael

        “StrategyEye quotes Universal Music International digital VP Rob Wells who says the company needs 10% to 12% of its users to subscribe to be a sustainable business.”

        5% is also low considering very few have access to the full (invite-only) freemium. So if people really want to use Spotify they _have_ to pay. The other limited freemium is to get people to try the service and to limit Spotify’s losses.

  • http://kodfabrik.se Pelle Wessman

    The 20 hour limit is only for people who didn’t receive an invite for their account – the ones who did can stream as mush as they want without paying. A few millions of the free users probably got their accounts from invites.

  • http://www.nvivo.es Carlos

    I cannot understand.

    Do you have orders from US TC headquarters to go on throwing sh*t about Spotify? I feel the antieuropean smell every time somebody from TC US post about them, but you???

    Spotify rules, and it’s from Sweden, get used to it.

    • http://techcrunch.com Robin Wauters

      I see the Spotify fanboys are out in full force again. I’m not talking about the service in this post, but about the business. I’m not throwing shit, I’m being critical.

      • http://www.cognik.net Pierre Col - Kizz TV by Cognik

        I totally agree with You Robin: on a business point of view, considering numbers, revenues, profits, P&L, assets & liabilities, Spotify and similar freemium streaming services are a total mess.

        The fault is to the business model of the majors, who take a lot of money from high fixed and varaibles fee, so there is no real space for business innovation.

      • BB

        Robin – we’re talking about your biased approach to startups. You can’t be serious to hold on to “The business” argument? 5% is very high for this model.

      • http://techcrunch.com Robin Wauters

        No it isn’t.

    • Sean

      Robin lives in Belgium, does he not? Also I don’t really see this as “negative” about Spotify.

  • http://www.twitter.com/jlhortelano Juan Luis Hortelano

    What’s the conversion rate of people streaming videos from Youtube???
    How many Facebook users pay for it?

    Pretty ridiculous post.

    • John

      Facebook and Youtube (for the most part) don’t have the same costs per customer as Spotify therefore they don’t necessarily require revenue from customers. Spotify DO. The otehr two services don’t have to deal with licences, copyright infringements that make the cost of each monumentally greater than that of Facebook. Even YouTube, who’s user uploaded videos don’t have high costs as the copyright protected commercial videos don’t have thesame costs per user. ALthough, yes they do have similar issues in some cases, but not enough to warrant charging customers.

    • http://techcrunch.com Robin Wauters

      You cannot seriously be comparing YouTube and Facebook with Spotify?

  • http://techtricksy.blogspot.com Tech Updates here>>

    Spotify has created a lightweight software application that allows instant listening to specific tracks or albums, with virtually no buffering delay. users will simply download and then log onto their service enabling on demand streaming of music.

  • http://www.cognik.net Pierre Col - Kizz TV by Cognik

    Freemium business model is not sustainable nor profitable on the long run, at least for entertainment services & platforms that have to pay fees to right holders for their music, films, videos, comics etc.

  • Johnboy

    I have had a spotify account for well over a year, I have considered upgrading the account to use on my mobile but £9.99 on top off all the other costs I pay to use my phone seems too steep.

    If they could offer mobile access in the £4.99 package I would not hesitate to sign up for that.

  • http://www.softzone.es/2010/09/15/spotify-llega-a-los-diez-millones-de-usuarios/ Spotify llega a los diez millones de usuarios : Soft Zone : Blog sobre Software con tutoriales de ayuda y noticias

    […] Fuente: Techcrunch […]

  • http://www.twitter.com/shoukoujo Sarah Roy

    I’m a user of Spotify since the launch in France, and I’v subscribed several month ago to the 9.99€ premium account. This is one of the only paying services that I could not do without. I hope the service will keep growing and that people will realize that it’s a great solution to listen to every music you like legally. It’s not even the price of a CD, so for me it’s a no brainer!

  • http://apple-watch.com/?p=383 10 million users have tuned in to Spotify so far, but only 1 out of 20 pays for it | Apple Watch

    […] same amount of users as there are tracks in its vast music catalog, to put things in perspective. full story Categories: Tech Tags: Spotify Comments (0) Trackbacks (0) Leave a comment […]

  • flobota

    Spotify is awesome and I want to pay for the premium service, but I cannot because they don’t accept payments from outside Spotify countries. So they just should hire some good negotioator to get this more then great service to Germany (and other major countries still missing)!

  • BB

    Robin – we’re not fanboys…TechCrunch is of selected startups…others, like Spotify get negative press (or no press) for no reason. 5% is VERY HIGH for this business model. Check your facts before you publish a negative story.

    • http://techcrunch.com Robin Wauters

      This isn’t a negative story, you can stop trying to make it look like one for whatever reason. And 5% is low, not embarrassingly so but still low.

      • Matt

        Low compared to what, though? That’s the crucial datum missing. What is Flickr’s paid user penetration? That seems like a reasonable comparison.

      • http://techcrunch.com Robin Wauters

        Low in the minds of music industry executives, some of which have said publicly that they expect Spotify to reach 10% to 12% conversion to remain viable.

        It’s very important to understand that the labels are crucial partners and stakeholders for Spotify, a ‘problem’ other services like Flickr simply don’t have.

        That’s why I wrote that there aren’t any solid industry benchmarks for conversion rates of ventures like Spotify, which in turn gives much more weight to the expectations of Big Music in determining if 5% is on the low side or not.

  • http://www.gadgetvenue.com/spotify-hits-10-million-users-09152004/ Spotify Hits 10 Million Users

    […] user milestone. The information comes from a "special party" that some press have been invited to. Tech Crunch compare the number of users to being almost the same as the available tracks on the […]

  • http://www.side-line.com Bernard - Side-Line Magazine

    First this, I run a label and despite the negative comments on Spotify from the likes of Lady Gaga, I can assure you that the Spotify model is generating more money than any other streaming service out there.

    Secondly, labels often make the error thinking that Spotify is a download service. Actually it’s more a radio. And as such Spotify beats all the last FM’s of this world by miles.

    So perhaps one can say that the conversion is low (though knowing the business, it’s actually rather high), but fact is that their service is spotless and generating revenue and reach.

    I’m waiting to see it released on US soil, that’s when we will be able to see the real power of Spotify. But as pointed out above, there is a clear US boycot to get Spotify launched stateside. Is this to favourite US streaming services?

    A pity.

    • http://www.nvivo.es Carlos


  • Mike


    how many of the 10millions are former “pirates”?
    I have been downloading torrents for ages since I found Spotify.
    You should acknowledge that among pirates (the biggest users of digital music) the conversion rate is probably HUGE.

    the label should thank Spotify big time. Fullstop.

    Another consideration over the business model.
    it’s not premium, but ad supported and premium. it makes a big difference (it’s not free and premium…)

    hence, ALL the stakeholders have a benefit.
    and money come in from free riders (via very targeted Ads) and paying customers. good stuff.

    you can’t wait to use it in USA, can’t you?

    • http://techcrunch.com Robin Wauters

      Who says I live in the USA? Who says I’m not using Spotify right now?

      • Mike

        your answer is off topic.
        Pls comment on the conversion rate from pirate to Spotify user.

        I gotcha :)

        The labels should do the math: less piracy = more monetization.

        Spotify is just great, they managed to let me stop torrenting…

      • Hans

        Same here

      • Hans

        What’s the point in discussing if 5% is high or low?

        They paid out 10 million Euros to artist and labels in Q1 2010. Check http://www.spotidj.com/blog/?p=88

        This means they are doing just fine.

      • http://www.side-line.com Bernard - Side-Line Magazine

        Considering my remark below, Spotify probably has a margin before non label costs of around 2 to 5 %. I don’t think that’s enough to turn profit, but when scaled, it could well be. Only Spotify can enlighten us. :)

  • Ringo

    5% is definetely not a low conversion rate for this kind of service.

    • Mike

      not only that.
      assuming that 50% pays 5/month and 50% pays 10/months, we have 3.75 millions/month + revenues from ads, let’s assume a couple of millions.
      It make almost 6 millions/month.
      it’s fair to think that the turnover is 70 millions/year.

      costs: rights, offices, employees, mkt, hosting.

      not too bad for a TWO years old company…

      • http://www.side-line.com Bernard - Side-Line Magazine

        Mike, the add revenues will be very low. And I mean VERY low but still, yes it is generating money. Let’s say 4 million per month both paying and adsupported? That 48 million / year

        You also have to calculate the company’s costs (obligations towards labels etc which sometimes are overpriced) as well, and that will eat at least the ‘magic Apple’ of 70% of that budget I’d assume + costs personel + costs servers – buildings + consulting + ….


      • Mike

        Bernard, we need to remember that Spotify has been or still is, don’t remember, an invitation only business.
        I assume it has been “controlled” since streaming music is a new thing for many out there, and we can’t predict user behaviours and service adoptions.
        controlling the users has been a way to control the cost (liabilities, employees, etc)

        the article mentioned stakeholders, and I believe they all have to be very happy from the first 2 years of experiment.

        how many radio users out there?
        how many music lovers?
        how many pirates?
        how many are buying a phone capable of running spotify app?

        the 10 millions are the very early adopters.
        Spotify is crossing the chasm.
        i believe they are already profitable.

        consumer behaviours (mobile) and connectivity everywhere will help Spotify to grow old and its stakeholders will be all paid off.

        Long life Spotify, the sky is the limit.

      • http://www.side-line.com Bernard - Side-Line Magazine

        And to get back to the Lady Gaga story: I think she burned a lot of ad only supported plays but not paid subscription ones :)). That could explain it because with 1000.000 plays we do get substantially more than just 167 dollar as she claimed… rather 20 fold.

        Then again, it probably also means that the label turned 20 fold… she signed the wrong contract :))

        So who is lying here?

      • http://www.side-line.com Bernard - Side-Line Magazine

        @ Mike: oh but I don’t contest that, I just straightened out your figures a bit. For the rest, I think Spotify might be the perfect service all round. Despite the US boycot.

      • Hans

        The Gaga pay out is probably just for copyrights of the composer. They are way lower (0,0001 to 0,0002 Euro) than the pay outs to the performing artist (neighboring rights) 0,001 to 0,002 Euro per play.

        Check this article http://www.digimuziek.nl/nieuws/?p=316 (Dutch)



    For years I used torrents to get music. I have 150gb of music. About a year ago I found out about spotify
    signed up for their free service. Paid 9.99 for the premium service and since then I stopped downloading.

    No longer messing with meta data, no longer messing with low seeds slow downloads. i HAVE THE MUSIC there ready for me.

    I live in the U.S Miami, FL to be exact and i went through loops to get spotify. A year later I am still a paying customer. Yeah I pay 2-3 bucks more then what I should be paying (dollar to euro) But to have the ability to hook up my iphone to my car radio and have access to any type of music EVER! i priceless.

    I tried rdio, mog, thumbplay, rhapsody, They all failed to keep me as a customer.

    I am sure once spotify hits the states. GAME OVER!!

    • Mike

      Same here. To prove that labels should look at the conversion between pirates to paying customers. it’s a no brainer.

  • Lazarus

    I work in the freemium business. 5% is not low. I come here to learn, not to have to teach the journalists.

    • http://techcrunch.com Robin Wauters


      • Lazarus

        I guess you are this dismissive of most of your sources. Hence the innacuracy.

    • Mike

      Lazarus you rock, you are spot on. ha ha ha sooooo funny, just for me.
      not for Robin I guess :)

      don’t worry mate, plenty of new companies to cover in future :)

  • http://hostplate.com/2010/09/16/10-million-users-have-tuned-in-to-spotify-so-far-but-only-1-out-of-20-pays-for-it/ HostPlate | Shared Hosting ,VPS Hosting , Dedicated Server , Cheap hosting » News » 10 Million Users Have Tuned In To Spotify So Far, But Only 1 Out Of 20 Pays For It

    […] Read the rest of this entry » […]

  • http://technytt.se/2010/09/spotify-har-nu-10-miljoner-anvandare-fa-betalar/ Spotify har nu 10 miljoner användare – få betalar

    […] TechCrunch Tweet […]

  • Serdar

    %5 is good, and considering the price is 10€ it is really good. From 0 to 10 is a very steep and aggressive curve but they nailed it. This will be more appreciated if and when they leave the limited/controlled user base and go all around world. With Asia and S.America in the game the %5 will even go much lower but still the mass will bring the numbers significantly high.

    I think it is obvious that they proved this business model can work, next step is to expand without losing publishers and not committing to bad deals. We may also see them introducing new price categories such as silver/gold users, etc…

  • http://kalingeling.wordpress.com/2010/09/15/kalingeling-schulterblick-14-09-und-15-09-2010/ Kalingeling-Schulterblick: 14.09. und 15.09.2010 « Kalingeling – Verdienstkonzepte im Netz

    […] Das Musikportal Spotify.com erwartet den 10-Millionsten registrierten Nutzer zum Ende dieses Monats. Allerdings besitzen gerade einmal etwa 500.000 Nutzer einen kostenpflichtigen Premium-Account, Tendenz gemächlich steigend. [via TechCrunch] […]

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