Earlier this year, we questioned whether Spotify was at risk of going bankrupt. But for a rebounding music industry, is this company simply too big to fail? Now, with 50 million paying subscribers, the Spotify riddle gets a little trickier.
Time for the labels to lower their rates? Or can Spotify afford it? Now, there’s more evidence of the latter.
Just this afternoon, the company reached 50 million paying subscribers. Spotify didn’t disclose its top-line user metric, though total users may be in the 125-150 million range.
That means tons of paying subscribers, and even more (expensive) free users. All of which may — or may not — be a sustainable business model.
vs. Apple Music
The news comes on the heels of a bullish stat from Apple Music. Just last month, Apple executive Eddy Cue revealed a paid subscriber tally reaching 25 million. But that is just half of Spotify’s tally, thanks in part to a 5+ year head start.
In a tweet, Spotify said it added more than 10 million paying subscribers in just 5 months. That’s a heady increase, and seems faster than Apple Music’s rate of growth.
+ UMG Alone Earns $4.5 Million a Day from Spotify, Apple Music, and YouTube
Perhaps more importantly, Spotify and Apple Music now boast a combined 75 million paying subscribers. That pushes the overall tally of people paying for streaming services well past 100 million.
Premium services from SoundCloud, YouTube, Google Play, Napster, Deezer, and Tidal are lagging far behind. In fact, the grim reaper could very well tap the shoulders of a few of those players, starting with the extremely over-leveraged SoundCloud.
Too big to fail?
But the 50 million mark comes with a lot of concerns. Amidst an unnerving $1.5 billion debt load, Spotify is finding it impossible to open on Wall Street. Profitability concerns are plaguing the company, according to reports, with major label licensing costs considered unbearable.
+ Is Spotify Going Bankrupt In 2017? Wall Street Delivers Another Red Flag
Of course, the ‘big three’ majors are notorious for driving well-financed companies into the ground. But maybe this is one golden goose that gets spared. And 50 million paying subscribers means more leverage — and potentially better deals in the end.
That said, Snapchat is currently soaring after a heady IPO. And that’s building hope that a profit-challenged company can successfully debut.
For every dollar Spoofy collects $10 dollars have EVAPORATED from music industry and musicians. Only YouTube beats Spoofy in MUSIC INCINERATION. Google’s FREE music jukebox burns $40 dollars in music goodwill for every dollar in ad revenues!
Time for awakening at the L A B E L S and industry wide resurrection involving (lost and withdrawn from reality ) mega stars and politicians to PUSH Google to fairness zone. $300B of MUSIC GOODWILL OBVIOUS TO AN IDIOT IS WAITING FOR INDUSTRIAL harvest!
Remi, I thought I told you to go to bed? It’s way past your bedtime. Nobody wants to hear your dumb paranoid rantings. Praise be to Spotify!
50 MILLION payming members and counting!!! Remi is living in a fantasy world, dude. Get with the times Remi!
The industry is living in outdated business environment with ZERO creativity!
Music is ABSOLUTELY POSITIVELY the best C R O P for automated computer HARVESTING!
As is we are using it as a F E R T I L I Z E R for arrogant and egoistic internet ad farmers!
I don’t get at all, why artists hate Spotify so much, they put their music on YouTube (that pays lowwwweeer as hell) but complaint about Spotify, that pays way better. Take off your videos from YouTube then. Spotify (and streaming in general) is resurrecting this decadent industry, be happy for that.
My Music Got 1,000,000 YouTube Views. Want to See My Royalties?
Not all of us are so inconsistent. I hate Spotify, but I hate YouTube more.
It strikes me that the most egregious element in the new digital music model is the antiquated deals labels are signing with artists. Bands shouldn’t be required (or shouldn’t sign) deals based on the old distribution model of records and CD’s. Digital music is not going anywhere no matter how many vinyl fans or CD enthusiasts. Given the cheaper distribution costs for streaming, labels need to take less and artists are going to have to expect less. Ultimately getting your music played often is going to translate into more ticket sales and greater recognition which will put money in the artist’s pocket. If the labels insist on taking 80% of all streaming revenue and the artists aren’t getting fairly compensated how is it the fault of anyone other than the labels and whatever deal the artist signed? Blaming the distribution channel who has a 20% gross margin is ridiculous. It would make more sense for artists to come together without the major labels and offer their music directly through streaming companies and recoup 60-70% of the revenue while allowing the streaming platforms to become sustainable and level the playing field in what bands get airplay globally.
You hit it right on the head…now that the streaming players control the eyes/ears as well as the playlisting/promotion channel directly…they can take over the role of the label. Labels need to start working more cooperatively with the rest of the value chain or risk complete disintermediation…..
I don’t think it will be a bad thing. Labels don’t provide the only way to make it as a musician. Most bands on labels don’t have a career and after they’ve spent their advance, if they get one, never see a dime because any sales are used to recoup their advance. The label throws it against the wall and if sticks they support it but otherwise they leave it on the floor and try another. They aren’t in the business of promoting great music or making bands, they want a quick hit, ride the act as far as they can and then find another.
I think it would be great to cut out the label and get music from the source right to the listener. I’ll pay to stream if I know 70% of what I spend goes to the band. They can decide what they want to do with their 70%, pay a manager, pay a PR firm, whatever…