Spotify’s path to 50 million paying subscribers

Spotify announced another major milestone yesterday, as the music-streaming giant revealed it now has 50 million paying subscribers.

The news arrived almost six months after the company announced its last subscription achievement, passing 40 million paying members in September. This means Spotify has grown its monthly subscription base by a quarter in half a year, which isn’t bad by any measure. And this current upwards trajectory sets Spotify up nicely as it reportedly prepares its IPO plans for next year.

Founded out of Sweden in 2008, Spotify has emerged as the pre-eminent brand in the music-streaming realm, going from strength to strength since it launched in the U.S. back in 2011. But the company has steadfastly stuck to its freemium guns, despite criticism from within the music industry that its free ad-supported tier devalues the music. Spotify has always insisted that it’s the best way to get people to pay: “Suck it and see,” seems to be the general idea.

Here, we take a look back at how Spotify has grown its paid subscription base.

1 to 2 million (2011)

As it prepared to launch in the U.S., Spotify announced its official subscription numbers for the first time. In March 2011, the company claimed one million paying members, which represented around 15 percent of its total user base. Six months later, that number had doubled to two million.

4 to 5 million (2012)

It was another year before Spotify provided any subscriber updates, revealing in August 2012 that it now had four million paying members, which equated to roughly a quarter of its overall monthly listeners. Four months later, this figure had climbed to five million subscribers out of 20 million in total.

10 million to 20 million (2014 / 2015)

The next major milestone came in May 2014, when Spotify revealed 10 million subscribers from a user base of 40 million, maintaining its 1/4 ratio. Six months later, this had jumped 25 percent to 12.5 million / 50 million, before jumping roughly another quarter to 15 million / 60 million just two months later, in January 2015.

By the time June 2015 came rolling in, Spotify claimed a substantial 20 millionsubscribers (from 75 million overall), which represented a 30 percent growth over five months and a pretty impressive 100 percent year-on-year rise.

30 million to 50 million (2016 / 2017)

In March 2016, Spotify CEO Daniel Ek took to Twitter to announce that the company now had 30 million paying members, equating to a 50 percent rise in nine months.

We have 30 million @Spotify subscribers, but none of them are in Cuba … yet. So cool to see Cuba opening up! https://twitter.com/williamsjon/status/711682798327758848 

But perhaps more notably, three months later Spotify revealed that it had climbed past 100 million active listeners overall. This was the last time Spotify announced an overall listener number.

Then, in September, Ek announced via Twitter that Spotify had 40 million paying members — an increase of around 33 percent over six months.

Number crunching

What’s perhaps most impressive about Spotify’s growth rate is that it doesn’t appear to be slowing — not to any meaningful degree, at least. Spotify always maintains at least 25 percent growth over six-month periods, and often manages much more. The company grew its paying subscribers by 100 percent from May 2014 to June 2015, then by another 50 percent over a nine-month period leading to March 2016 — alternatively, we could say it grew by 100 percent over a 15-month period if we take it up to last September.

And from March 2016 to yesterday’s reveal of 50 million paying members, we now know that Spotify grew its subscription base by 70 percent year on year.

VentureBeat reached out to Spotify to ask if it could discuss its current overall number of users, but alas the company is no longer sharing that information. We do know it was at 100 million as of last June, and historically the total has been roughly four times that of its paid user base. With Spotify now counting 50 million paying members, we can guess that it is probably close to 200 million users overall — but that milestone will likely warrant an independent announcement when it happens.

Spotify has been investing heavily in keeping its platform as sticky as possible — it doesn’t just want people to subscribe with their bank details, it wants them to remain as paying customers. With that in mind, Spotify acquired the Echo Nest a few years back to improve its music recommendations — this has resulted in such features as its Discover Weekly playlist. And back in November Spotify snapped up Preact, a startup that helps companies acquire and retain subscribers, using analytics and machine learning. It seems Preact has since been shuttered, meaning that the folks behind the company are now working exclusively on helping Spotify predict its users’ behavior around subscription sign-ups and upgrades.

Whether Spotify goes public this year, or, as is looking increasingly likely, next year, the company is putting in the spadework to ensure that it maximizes non-advertising revenues ahead of its IPO.

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