Spotify growth suggests ‘freemium’ model may dominate

Valerie | 29 Apr 2009, 14:58

Music streaming service Spotify has revealed that it has reached a major milestone and hit 1 million registered users in the UK since launching in October.

Speaking at the MediaGuardian’s Radio Reborn conference this week, UK Managing Director Paul Brown said that “a decent proportion” of these are paying subscribers, although he declined to specify exactly how many users this equates to.

In an interview with PaidContent, Brown explained that Spotify’s success lies in its multiple model approach, noting that “it’s a fragmented consumer base, not one size fits all”. He added:

“The Spotify model is about an access point which is free, supported by advertising. The premium element isn’t just about no-ads; we’re only just out of the blocks, it’s about a platform that will grow with other things in it.“

Brown went on to state that Spotify could follow the example set by traditional radio when it comes to the “editorialisation” and localisation of content to expand its business model in the future, hinting that this could come about through partnerships with other organisations similar to its current tie-up with 7digital.

In a previous interview with PaidContent, Spotify CEO Daniel Ek confirmed that the company expects to be profitable this year:

“In the end, it’s about trust, we know that 99 percent of all music businesses, especially online, don’t generate any revenue. For this to be a long-term, viable business, we need to generate revenue for the artists and labels; that’s our key focus. Once we think that we have Europe working properly, we’ll definitely roll it out to more territories.”

Spotify is planning to launch mobile applications and is also considering hosting rare content such as archive radio shows.

As PaidContent observes, the so called “all you can eat” music subscription model is emerging as perhaps the likeliest of the unlimited music access platforms to succeed.