Spotify Users Are Twice as Likely to Purchase a Download

That’s according to an early assessment by NPD Group analyst Russ Crupnick, who sees very little sign of Spotify-generated cannibalization on downloads.

In fact, he’s witnessing the opposite: since Spotify arrived in the US in July of 2011, Crupnick has observed that Spotify users are twice as likely to purchase a song download from iTunes or Amazon.

“I can tell you that we see Spotify (I’m talking free) users more than twice as likely to be buying digital downloads compared to non-users, and that ratio has not changed since the introduction in Q3 ’11.”

This is based on a quarterly, music-focused consumer survey that NPD has been conducting since 2001, specifically involving Americans over the age of 13.  The company now claims a 95 percent accuracy projection, with the following stats showing up for the second quarter of 2012 (ending June).

  • 38% of Spotify users report buying a song download in the past 3 months, compared to 17% for non-users.
  • 36% of the tracks that Spotify users acquire are from paid download stores, a ‘reasonably steady’ number.  (The rest is CDs, borrowing and burning/ripping, BitTorrent, etc.)

The hard numbers – particulary from Nielsen Soundscan – support the claim.  After suffering a sales plateau, paid downloads seem to be elevating once again, in concert with streaming increases.  All of that said, Crupnick cautioned that broader trend analyses will take time to formulate.  Indeed, the on-demand streaming space is green; it could be millions of users away from maturity.  “Once we can trend an entire year of Spotify data it will be more accurate in terms of assessing the impact,” Crupnick continued.

But that growth process also opens the possibility of serious cannibalization ahead.  Part of the reason is that Spotify’s early adopters are really into music, which means they’re more likely to say yes to everything: streaming, downloads, vinyl, concerts, whatever.  The next few million may be far less passionate, and less voracious consumers.

27 Responses

    • Stats Geek

      Be careful about the conclusions you draw from this. This data DOE NOT SAY:

      Being a user of Spotify INCREASES your probability of buying music. In order to know that, we would need to know what the buying habits of these Spotify users was BEFORE using Spotify. In fact, it is possible that it decreases that probability (not saying it does, just that its not clear).

      In other words, its possible that we have a systemic ‘bias’ occurring here. The thoery would go like this:

      1. People who use Spotify are more ‘into’ music than people who don’t. i.e they tend to listen to more, buy more, etc – as a class. they are early adopters of new music tech like Spotify.

      2. Therefore, any measurment that attempts to compare Spotify users to non-Spotify users would suffer a systemic bias (each group would have innate characterisitics that make them different as groups in terms of their natural behaviors).

      So, this study (at least the little bit of it revealed on DMN) does not say that Spotify is CAUSING people to buy more music any more than it is saying that people who use Spotify tend to be people that buy more music anyway.

      I’m not bashing Spotify, either. Better studies might reveal causality here. But that would be an inaccurate take away from this one.

    • YV

      With the obvious exclusion of any valuable data from this research, and if GS clients remain committed to being investors in Spotify, they are obviously secretly being told this is a classic pump-and-dump scheme.

  1. Visitor

    Yeah, that’s right; we can’t possibly see any good news about Spotify, can we? Go back to listening to your record players, losers.

  2. Visitor

    The first two commenters are obviously still living in the past. Spotify and its like are the future whether you like it or not. Deal with it or end up like the record companies!

  3. Visitor

    Aww… are the poor little babies crying that the artists aren’t getting paid enough still? Give it up already! I’m about to gag if I hear that again. About time we get some good news about Spotify on here. Thank you, DMN. I know it was extremely hard to report it with all the cry babies on here.

  4. Visitor

    OMG… am I seeing what I think I’m seeing on DMG. Good news about Spotify? What?! That is blasphemy! You will anger all of the trolls on here wanting more pay for the artists.

  5. Visitor

    Oh no, prepare for all of the artist backlash crying to get paid more and how Spotify doesn’t pay enough to these poor little artists!!! I THINK I’M GOING TO THROW UP NOW……

  6. Artist 2

    This is a response to the very first commenter. I’m an artist too. However, the difference between you and me is that I know Spotify is the future. I want to make my fans happy and still be able to hear my music. I know the money will come. I can’t live in the past or I will be left in the past. Grow up and grow some!

  7. Casey

    I find this a little surprising, but at the same time I have to agree. I have purchased more music lately (downloads anyway) than I had for quite some time, despite subscribing to a music service. There are some songs you discover that you just want to own. Songs I would never have bought without the services because they introduced most of the music to me. It was not the cookie-cutter broadcast radio nor the iTunes best selling. It was the similar artist features and the product’s internet radio services that introduced me to new artists and therefore new songs.

  8. @mattadownes

    Apple is patiently waiting for the downloads tail to start winding down before they drop the ultimate radio/streaming/locker service.

    It makes sense to ride out paid downloads the same way it makes sense for majors to still depend on cd sales in the big box retailers.

  9. HansH

    Paul, I was told there are riots outside U.S. embassies because of the blasphemous picture you created. Beware!

    • paul

      ha ha… the Christians are a more peaceful flock. Though I’m burdened with the heavy guilt of what I’ve done.

      /paul

  10. Cliff Baldwin

    Does anyone know why Spotify insisted that all affiliate links to iTunes were removed from their product? The labels used to try to put them there and buy links to iTunes for sales. If they kept those, they wouldn’t have to tell lies like this; they’d just know how much music they were selling. Impressive spin and PR department, if not an impressive product or business model.

  11. Kai

    People who walk into music stores are twice as likely to buy music than people who do not walk inot music stores.

  12. TUNE HUNTER

    Those users are just music freaks so if you would take away from them free Spotify they would be 10x more likely to buy from iTunes or Amazon!

  13. Adam

    Well I guess they finally see what we all knew 11 years ago when the napster debacle was happening…

  14. riiiight

    So, if 38% of Spotify users buy a car in the last 3 months, compared to 17% of non-users, then Spotify promotes car sales?

    And what kind of uneducated social-media-lobotomised moron compares 38% with 17%?!?

  15. Crow

    As a heavy Spotify user and user of other legal streaming services I can tell you that I’m not among the 38% mentioned in the report. Since I have been using these streaming services I have bought less music.

    Years ago, when I heard a song on the radio that I liked, I would go to a shop, listen to the album, and if I liked what I heard I’d buy the album. A lot of these albums are now stored in a cupboard in an other room, never to be played again with a few exceptions. Now that I have Spotify, I listen to a new album once, maybe twice, and go on to the next one.

    I only buy albums from artists that I really like, mostly extending my collection with albums of artists that I have loved listening to in the past 20 years. New artists I hardly buy anything from. I check them one or two times on Spotify and that’s it. Albums that I like get saved to playlists so I can return to them later

  16. d the l

    sad to see so many scoffing at the idea that artists should be compensated fairly for their work.

    • Visitor

      Yeah, we know; you’d rather see the consumer (your fans) get screwed instead. If you had it your way, we would be charged $20+ for your vinyl. No, thanks!