Spotify has hit the 100 million-user mark, a new height for the streaming music leader as it battles some of the world’s biggest companies.
And still looks to make its first profit.
The milestone extends Spotify’s position as the leading streaming music company, which also has more than 30 million users that pay for the service. The 100 million mark, first reported by Reuters, is important becauseSpotify’s “freemium” model relies on attracting users with its no-cost service and then converting those users into paying customers.
The news is a gentle reminder from Spotify that despite the entry of some major competitors, it remains the leading streaming service in the game.Once the biggest fish in a small pond that included other services like Rhapsody and Deezer, Spotify is now competing with the likes of Apple, Google and maybe even Amazon, which is reportedly working on its own standalone music service.
That competition has yet to become a major drag on Spotify. In fact, it could be helping.
Jan Dawson, a tech analyst at Jackdaw Research, noted that Spotify’s growth has accelerated since the launch of Apple Music particularly in how much money it’s bringing in.
“The interesting thing here, of course, is that 2015 is also the year Apple Music launched. Far from putting a dampener on Spotifys growth, Apple Music seems to have accelerated it, if anything,” Dawson recently wrote in a blog post. “More likely, the streaming music industry has simply reached a tipping point, and both the Apple Music launch and Spotifys success in 2015 are symptoms of that common cause.”
Growth in users and revenue is encouraging for Spotify, but profit remains elusive and seemingly distant.
Spotify makes almost all its money from subscribers that pay monthly for use of its service, with advertising presented to non-paying customers only bringing in about 10% of the company’s total income. And because Spotify has to pay the bulk of its incoming cash to the music industry currently more than 80% according to Dawson that makes turning a profit difficult.
That will change if Spotify can continue to turn those users into subscribers and if it can keep its competitors at bay.
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