Spotify races to 100m users
Music firm thrives despite attacks from rivals
SPOTIfY has become the world’s first music streaming service to reach 100m paying subscribers as it fights a vicious turf war with Silicon Valley’s tech titans.
The milestone is an early victory for the Swedish firm amid fierce competition from rival services run by Apple, Google and Amazon.
The company revealed revenues had surged by 33pc to £1.3bn in the first quarter and losses narrowed to £146m – a better result than analysts expected.
But the pressure on the New Yorklisted business is set to increase after Google and Amazon both unveiled free versions of their music streaming platforms this month. Paid-for service Apple Music is also gaining fast on Spotify, boasting 50m subscribers, and has surpassed it in the US.
It has prompted fears Spotify will be out-gunned by the tech giants which have vast resources at their disposal.
As the competition has increased, Spotify has branched out into other types of media such as podcasts, and has also starting seeking listeners in developing countries such as India.
Yesterday analysts said this appeared to be paying off but they cautioned that the company cannot rest on its laurels.
Daniel ek, Spotify’s chief executive and co-founder, insisted he is not worried by the opposition because there are more than enough potential customers to go round.
The 36-year- old said: ‘ We’ve always had competition. Competition has always come in the form of much larger players – that’s not unusual to us.
‘Yet, we keep on doing what we said we are going to do and keep on growing at more than 30pc per year.
‘And the point with that, I think, is that the music industry market is just way bigger than most people realise.’
Spotify said it has 217m users overall. Those who do not pay must listen to advertisements between songs.
The firm makes the vast majority of its income from its £9.99per-month ‘ premium’ subscription which gives listeners access to an advert-free service and other features. Currently 100m pay for this service.
Globally Spotify still has double the amount of paying subscribers as Apple but in the crucial US market it has been overtaken.
Apple Music is thought to have more than 28m paying US subscribers, while Spotify has around 26m, it was reported this month.
There is a brutal battle for American listeners between the rivals, with Spotify offering discounted subscriptions and bundles with video service Hulu.
In europe, the Swedish company has separately stepped up its fight with Apple by filing a competition complaint against the iPhone maker. Spotify claims Apple has abused its control of the iPhone App Store to the advantage of its own music service – an allegation Apple has denied.
But it also faces pressure from Google and Amazon, which are launching ad-supported versions of their music streaming services that will be compatible with their smart speaker devices.
Analysts estimate Amazon has around 20m paying subscribers for its music service.
Spotify’s results yesterday helped ease concerns it would be crushed by its bigger rivals. It forecasts revenue of up to £5.9bn for 2019, slightly above analyst expectations of £5.8bn, and said it expects to reach 127m paying subscribers in that time.
Nicholas Hyett, an analyst at Hargreaves lansdown, said: ‘With rivals of the calibre of Amazon and Apple, Spotify can’t afford to rest on its laurels, but so far the group seems to be more than capable of holding its own.’
Spotify said it spent nearly £310m last year buying podcast firms Gimlet Media, Anchor fM and Parcast.