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Paid Downloads vs. Spotify Active Users, 2006-present…

The blue bars represent the growth rate for paid downloads from iTunes, Amazon and others (ie, zero = no growth).  The black line represents Spotify active users, measured in millions.  Spotify first appeared in 2008.

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Paid download data from Nielsen Soundscan; Spotify active users stats from Spotify announcements.  Written while listening to Phantogram.

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Comments (39)
  1. Yves Villeneuve

    That’s if you believe Spotify’s active user numbers. A few indie labels on here have reported ad-supported streams represented only 20-25% of total.

    About 90% of telecom/music bundles involve inactive subscribers based on past Spotify reports adjusted for indie label revelations on DMN.

    I would make a fairly safe guess the majority of paid subscribers are from telecom/music bundles, meaning there are only 4.4mm active paid subscribers, assuming Spotify will soon report 8mm paying subscribers. The true total active subscriptions, free and paid, is more like 6-7mm worldwide.

    The Spotify numbers are definitely skewed.


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    1. Anonymous

      Spotify doesn’t have many bundled subscribers. The vast majority of subscribers are subscribing directly to Spotify.


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      1. Yves Villeneuve

        Spotify has a lot of Telia bundle subscribers. There is no hiding from the truth.


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        1. Anonymous

          you cannot say that is the truth as you obviously don’t see the statements, the previous poster is correct


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        2. Visitor

          “A lot of” ? Some numbers please to prove your assumption.


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          1. Yves Villeneuve

            Why doesn’t Spotify release their numbers to prove everyone wrong? What are they hiding?

            My numbers are based on Spotity statements in the past. Search the DMN archives if can’t find on the Internet. They claim, though falsely, that 70% of registered Spotify users are inactive. 70% is false based on revelations of indie labels claiming on DMN that 20-25% of total streams are ad-supported, as opposed to 75% claimed by Spotify (24mm active users – 6mm paying users = 18mm ad-supported users or 75% of total Spotify reported users)

            Moreover, it is only wise to believe that when something “feels like free” unaware people don’t have an issue of subscribing to a streaming service to try it out and never return yet unwittingly remain subscribed to the Premium service.

            Here is the minimum impact from telecom bundles:

            http://techcrunch.com/2010/03/09/spotify-signs-exclusive-deal-with-finnish-telco-teliasonera-for-its-premium-offering/


            Reply
            1. Visitor

              I gather your an artist as well? Just check your streaming statements and look for Telia bundle streams. Check the Telia bundle rate. It proofs that your assumpution is wrong. The rate is about the same as the Premium tier. if people “pay”without listening the rate should be way higher.


              Reply
              1. Yves Villeneuve

                I don’t supply my music to Spotify.

                In any event, Spotify is selling the Premium subscription in a telecom bundle at 1 Euro per month. You don’t really believe Telia is paying 10 Euro per month for each subscription and giving it to customers for free, do you?

                I assume your stream rate information is correct.


                Reply
                1. Visitor

                  How can you pretend to be an expert on this if you don’t even use Spotify? You should release your music on Spotify man. Streaming income is growing and growing and getting close to my iTunes revenue..


                  Reply
              2. GGG

                Oh man, is he ever an artist. Look up his music on iTunes, he may in fact be the greatest artist alive.


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                1. Ted

                  Oh lord. I just heard some of the ‘songs’

                  Im not sure the lack of revenue against them is wholly due to the music retail platforms ‘du jour’…


                  Reply
  2. any mouse

    good lord… how about the amount of revenue generated last year from Itunes Vs. Spotify… anything starting at ZERO is going to have a larger “growth rate” than something that is established.


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  3. Anonymous

    So, download growth was clearly slowing well before Spotify entered the market. Interesting!


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  4. Anonymous

    What about download growth versus smart phone market penetration?


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  5. Me

    Comparing growth rates to active users doesn’t really tell a full story.


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  6. Casey

    So Spotify’s growth slowed and as a result sales fell? I don’t doubt that there are Spotify users who download less music as a result of using Spotify. It is only logical that you would buy less music if you pay for a music subscription. But this graph does not prove that. It shows sales growth was on a decline before Spotify even launched and the lowest year of growth occurred before Spotify had even gone global and launched in the US.

    It seems pretty clear something else is eroding the sales. Something with more reach. If I had to take a guess I would say Youtube. The amount of music available on Youtube has increased significantly. Youtube downloaders are literally everywhere. They among the top android app downloads, web browser extensions, software downloads, etc.


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    1. R.P.

      Nobody is using Youtube to play music in their cars or home systems. Spotify yes. Bad music is eroding sales.


      Reply
      1. Casey

        No, they simply downloaded the songs to their music collection and don’t have to worry about Youtube anymore.

        Radio and purchased/stolen music still make up the vast majority of in car listening anyway.


        Reply
  7. DUDE

    Certainly makes for a nice looking graph that supports the Digital Music News party line, but I think a far more relevant, apples-to-apples comparison would be Spotify growth rates to download growth rates or number of active iTunes users vs number of active Spotify users. While you’re at it you might consider the context a little; downloads were relatively new in 2006, now they are well established & streaming is the growing new technology.

    Ive said it more than once but Ill say it again since it didnt seem to make an impact — you’re not doing your arguments any favors by making misleading comparisons and taking statistics totally out of context like this


    Reply
  8. GGG

    Posting this graph really serves no purpose whatsoever. The only numbers that should matter is how much money the industry is gaining or losing. Do that graph and then we’ll have something concrete to debate.


    Reply
  9. Anonymous

    The iPhone was introduced in January 2007. Youtube is free on every iPhone. iPhones are always connected to the internet, so you don’t need to download anything.


    Reply
    1. TuneHunter

      …and free Shazam is part of the same ecosystem. Before iPhone Shazam was splitting one dollar with ATT and others with not a single penny drifting to musicians.

      The biggest problem and ONLY OPPORTUNITY is in music discovery!


      Reply
  10. Anonymous

    Apple killed the paid download.


    Reply
  11. cjhoffmn

    There are a few interesting things that might be tested from this, but this is simply a negative correlation (and not a particularly strong one at that (~-.7% – the correlation coefficient is ~.55 – so maybe a little more than half the data is predicted if we have one piece of data.)

    Put this chart up against downloads: http://flavorwire.files.wordpress.com/2011/05/vinyl-growth-chart2.jpg
    I don’t think we should conclude that vinyl growth killed the download growth.

    At most this is a correlation that we should investigate, but there’s a bunch of things that immediately occur to me that we should ask about this graph:
    Downloads of what? Are those album units, or individual tracks?
    Spotify didn’t enter the US market until 2011. Downloads grew that year, faster than in 2010. It’s an interesting wrinkle in this data that should be explored.
    Spotify user growth slowed, as did download growth in 2013. Did Pandora grow? Were there other entrants that have effected both?
    Need to see the segregated growth of premium subs & free subs
    Need to see how many streams the free subs had as that will start to tell us the CPM that they are delivering to advertisers, and might inform us of the future growth of adv sales.
    Need to understand churn rate of the premium subs to inform us of the future grown of premium subs revenues.

    Absent more detailed data, I think we should be careful about drawing conclusions from this. After all shark attacks go up when ice cream sales go up too…


    Reply
  12. RIAA

    2013 USA streaming revenue: $1,437,000,000 USD


    Reply
    1. cjhoffmn

      From a link on the RIAA site:

      http://blogs.wsj.com/speakeasy/2014/01/07/music-fans-streamed-more-downloaded-less-in-2013/?mod=e2tw

      …”Despite the shrinking sales figures, Nielsen Entertainment analyst David Bakula was optimistic about the growth of streaming services. The 118 billion streams reported in 2013 generated about the same revenue as 59 million albums, or about one-fifth of the total albums sold in 2013″…

      It is interesting that they are reporting here 118 billion streams. That is a fair bit less than I think we were estimating in another thread. They also don’t cite the source, and its the blog, not the WSJ so I’m always wary of numbers.


      Reply
      1. Yves Villeneuve

        I read the article. Here are the facts about 118 billion streams.

        118 billion streams / 12 songs per album / 80 listens per song = 123mm albums streamed yet only generated revenues of 59mm albums.

        Some will question the 80 listens per song. I’m open to frank admissions. How many streams and unique songs you’ve listened in 2013 on Internet radio, on Internet video and on-demand online streaming services?


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        1. Yves Villeneuve

          Let’s not forget that Nielson is reporting Pandora’s worldwide streams (76mm subscribers) versus US streams only (21mm subscribers).


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          1. Anonymous

            Your US only stream number is full of shit. Streaming through a proxy/vpn is a pain in the ass and on top of that Pandora actively blocks known IP for proxies and vpns used to circumvent geographic restrictions. There is probably 1 million people who use Pandora outside the US/Australia/New Zealand and that’s probably a generous number.


            Reply
            1. Yves Villeneuve

              I agree, using VPNs/Proxies is a pain in the ass. This is why there are only 55mm out of 2.2 Billion Internet users 12+ who are using them. There are 232mm radio listeners in the USA alone; only 21mm are Pandora listeners.

              How many people use The Pirate Bay and other illegal torrent sites?


              Reply
    2. Yves Villeneuve

      I’ve looked for the source of your number that obviously includes iTunes Radio revenues. Can you provide a link to this invisible report? I doubt the RIAA would report in the comments section of a news/blog site.


      Reply
  13. Adam

    So paid download growth was dropping like a rock from 2006-09 and once Spotify came around it seems to have stabilized.

    Go Spotify!


    Reply
    1. Yves Villeneuve

      Any market with long term significance will stabilize around 0% growth or slightly above.


      Reply
  14. P

    Mismatch: SoundScan numbers are US only, the Spotify figures are global.

    Mismatch: SoundScan numbers shows growth rate, Spotify numbers show absolute number of users

    One note: Nielsen streaming numbers do not include Pandora. One could easily chart the growth of Pandora against the decline of US download growth rate…although it wouldn’t necessarily mean anything (just as download growth charted against vinyl sales growth wouldn’t meant anything, as one person commented above).


    Reply
  15. FarePlay

    Sensory Overload. Is too much, too much?

    no curation > no discovery > no growth

    Spotify is simply a mass merchandiser with too many choices. It stifles discovery, drains the excitement from music and disincentivizes listeners from purchasing recorded music.

    A healthy alternative: curation > discovery > growth.


    Reply
  16. donderoo

    Try to graph Spotify’s growth rate in a year against iTunes Radio and GooglePlay. That’s a comparison that’ll be worth something. But to compare iTunes growth year over year to Spotify makes little sense to me. It’s not an apples to apples comparison.


    Reply
  17. agelam

    The MP3 format is killing downloaded music. If every music industry producer would follow the flac format users could convert to CD or MP3. Depending on the use. You can convert to MP3 for i pods or CD’s for home and car use. Flac format is totally lossless and the perfect format. The proliferation of MP3 has made converting impossible.


    Reply
    1. Visitor

      Ust wait till Qobuz hits the States. Streaming music in FLAC. Great service.


      Reply
  18. guest

    spotify is a ripp off yet so many of you still defend it. go ahead defend your pennies instead of praizing something like itunes that shows good numbers .. majority of the subscribers on spotify are inactive
    just a matter of time before spotify. hits the dirt like all the others ..


    Reply

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