Spotify's revenue north of 50 million Euro this year?
Spotify has been pretty quiet about the number of premium subscribers to its popular streaming music service. But according to paidContent, Paul Brown, Senior Vice President of Strategic Partnerships at Spotify, on stage at the world's largest music industry trade fair Midem did finally come up with a concrete figure. Brown said that Spotify today has more than 250.000 paying subscribers. In total, seven million people are using Spotify, which means that little less than four percent of them are paying the monthly fee of about 10 Euro.
That means on the one hand that Spotify still has a long way to go to reach the 10 to 12 percent premium subscriber rate it needs to make its freemium business model work. But it also means that Spotify is generating a revenue of 2,5 million Euro per month or about 30 million a year only from premium subscriptions. With ad revenues of more than one million Euro per month in 2009, the total revenue for 2010 could end up somewhere north of 50 million Euro. Which is not too shabby, even if not enough to cover royalties and operational costs.
Personally, I'm convinced that Spotify can succeed in converting 10 or more percent of its users into paying customers. The mobile app and offline functionality for the desktop client were two really good premium features to start with, and an "add your own music to your Spotify cloud" option is rumoured to be the next useful and likely premium-only feature.
I'm sure that the more common smartphones and mobile data plans with high usage caps become, the more people will be attracted by the mobile apps and start flocking to Spotify premium.
During the week, good news came from Universal Music, whose Senior Vice President Digital Rob Wells declared Spotify a very sustainable financial model which was paying out well to the record labels which it has entered into licensing deals with, according to the Telegraph. If the labels are happy, that's good for Spotify and a requirement for the music startup to be able to stick to its chosen business model. Let's hope that one day, even artists will be seeing a bit more than only pennies from having their songs on Spotify.
