Spotify tops 50 million paid subscibers

STOCKHOLM • Spotify has surpassed 50 million subscribers, extending its lead over rivals Apple Music, SoundCloud and Google as the world's largest paid music streaming service.

The service, owned by Spotify Ltd, has been growing at a breakneck pace. The company said that it had 30 million subscribers less than a year ago and 40 million subscribers by September last year.

Apple, owner of the second-largest paid service, said last month that its streaming service has more than 20 million customers.

Adding paying customers will help Spotify to pitch to investors, who expect the company to file for an initial public offering (IPO) and are looking for signs that the company can convert its growing subscriber base into a sustainable business. 

Spotify, which is unprofitable, generates almost all of its sales from subscriptions, though the music service also has tens of millions of additional users who listen for free, supported by advertising.

It charges a standard rate of US$9.99 (S$14.10) a month and also offers promotions and discounts, including a US$4.99 plan for students.

Spotify and other paid streaming services have boosted the entire record industry.

Recorded music sales grew by 7 per cent last year, the fastest pace since piracy obliterated sales nearly 20 years ago, according to a report from media research firm Midia.

Streaming accounted for US$5.4 billion of US$16.1 billion in global record sales.

While the growth has been good for most holders of music rights, it has also emboldened Spotify in negotiations with record labels.

Spotify has not had long-term deals with any of the three major labels for months, and recent talks have reached a standstill, according to people familiar with the discussions, who asked not to be identified discussing private business matters. 

Spotify does face some pressure to make a deal with labels to help reassure IPO investors.

The clock is ticking. Investors in a previous fund-raising round have the right to turn their stakes into shares at a discount to the IPO price, with the discount growing if Spotify takes longer to go public.

On the other hand, the longer the labels wait to strike a deal with Spotify, the more users the service adds and the bigger its clout grows.

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A version of this article appeared in the print edition of The Straits Times on March 04, 2017, with the headline 'Spotify tops 50 million paid subscibers'. Print Edition | Subscribe