If 20% of the userbase is paying (a nice ratio!) and they have 3 million subs, then their broader userbase is 15 million.

Amazing growth.

Was at around 800,000 paid subscribers on January 26th 2011.  Now exactly 1 year later, it's at 3,000,000.

2,200,000 paid subscribers in 12 months.

On average, Spotify pays about $0.004 per stream.  200 streams will generate as much money as 1 Itunes download.

ask around your friends, check their itunes libraries, look at lastfm stats.

you'll find the reality is that hardly anyone at all listens to anything 200 times. It's an extreme rarity.

Here's something to think about:  Subscription music will overtake Itunes within 4-5 years

2010:  8.2 mil paid subscribers  per IFPI

2011: 13.4 mil paid subscribers  (65% growth) per IFPI

 Assuming each subscriber pay on average $89 a year, 13.4 mil paid subscribers = $1.2 billion a year in revenue.  Itunes sold about $3 billion worth of music each year worldwide.

Itunes:  $3 billion

Subscription:  $1.2 billion (growing at 65% from 2010 to 2011)

...that's assuming there's no growth in iTunes AND a huge growth with streaming services.

Please note:-

iTunes takes a clearly described 30% from its $3bln gross.

Spotify gives no details whatsoever of the percentage Spotify takes friom its $1.6bln subscription income.

How's that for transparency?

And how many album tracks do you listen to 200 times??

Lack of transparency is easily the biggest hurdle they'll have to deal with from the artist/label/distro side. 

Right now the speculation mill is about 50/50 as to how this will pan out. 

I still think this is kind of ship that will stay afloat for years with investors buying out earlier investors when the returns aren't that immediate. All they have to do is show growth, which they're doing, and doing pretty well all things considered. 

The facebook alignment is very much responsible for that growth. i doubt will see such huge jumps in the future, but with that kind of initial critical mass attained after US growth it's really just a matter of time. 

MOG CEO said his company pays 65% of its revenue.

His quote "the labels get 65% or so of MOG's income"

Google it.

Itunes pay 70%

Subscription music 65%

How do you think Spotify made such a huge loss last year?   Its cost of content alone was greater than its revenue.  This is before other expenses like staff, administrative, advertisement etc..

That's cuz the 70% iTunes pays includes publishing.  Subscription 60-65% doesn't incude publishing.

If that 65% growth from 2010 to 2011 is anything to go by....I believe subscription will continue to grow, especially with smartphones becoming more commonplace.

As for Itunes, I assume it will stay flat.  

More people switch to subscription = less people to fuel Itunes growth.  Itunes music sales could even decline.

The wildcard is mobile phone carriers.  Cricket, a regional prepaid phone carrier with 5 million users, already has 500,000 paid subscribers for its Muve Music.  It grew from 100,000 back in July 7th, 2011 to 500,000 in Dec 31st, 2011.  400,000 added in just 5 months.

If Verizon, ATT, Sprint, T-mobile want to create their own Spotify/Rhapsody/Muve Music/Deezer, subscription could increase to 30,000,000 paid subscribers within 12-18 months.  

Itunes could also join the subscription bandwagon.  

For example, Itunes Unlimited (unlimited music $4.99 for computer and $9.99 for mobile)

Itunes could create its own subscription service or it could buy MOG or RDIO or use the technology of Lala (that it acquired and shut down).  

The future of music consumption is subscription.  Smartphone (Android, Iphone) will pave the way.  

In Sweden, Itunes accounts for 16% of digital music revenue, Spotify accounts for 84%.  

Subscription services are our future!

¿Spotify puede morir de éxito?