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As Spotify Nears 30 Million Subscribers and Apple Music Exceeds 11 Million, Is Streaming Turning the Corner?
The two largest music subscription services continue to grow at impressive rates. Spotify now has nearly 30 million subscribers around the world. While a company representative declined to comment on both the subscriber count and what constitutes "nearly" 30 million, Billboard has confirmed through a source that the information in a Financial Times' article published today (Feb. 16) is generally accurate. The article did not cite the number of Spotify's monthly users that combine subscribers with users of the free service.
The last subscriber milestone, announced by Spotify last June, put its subscribers at 20 million. That number had surpassed 25 million by the end of the year, although the exact amount was unknown. While a hard number is still unknown, this new information suggests Spotify's growth has accelerated since the beginning of 2016.
Subscriptions are growing on a second front. A week earlier, Apple executives Craig Federighi and Eddy Cue announced Apple Music passed 11 million subscribers on John Gruber's podcast, The Talk Show. It had 10 million at the end of the year, having gained all of them since the first free trials ended at the end of September.
These updates say two important things about the growth of subscription services.
First, the growth in subscribers is quickening. Spotify has added "nearly" 10 million subscribers in the last 6 or 7 months (again, it depends on the definition of "nearly") after it added its previous 10 million in 13 months (May 2014 to June 2015). The subscription market took a few steps back in that time. Muve Music lost over 3 million subscribers and Rdio went out of business. Messaging service Line just announced it is shutting down MixRadio just over a year after buying it from Microsoft. But Spotify alone has added far more than other services have lost.
Second, Apple Music is accelerating the subscription growth trend. At this time last year the service didn't even exist, and subscriptions were on a hard pause while new users took advantage of a three-month trial period. It now claims 11 million subscribers -- or, at the very least, that many registered users on fewer accounts, thanks to family plans -- since late September (the first month since Apple Music's launch wherein early adopters would be transition out of their free trials). While it's possible Apple Music is siphoning off the growth of other services, given Spotify's growth rate and the size of the numbers at play, the more likely explanation is Apple Music found 11 million new customers that would not have otherwise paid for a subscription service. With its global presence and relationships with hundreds of millions of music consumers, Apple has a unique ability to attract first-time subscribers.
The pace of subscription adoption has a good chance of accelerating further. Both well-funded Spotify and deep-pocketed Apple have the ability to improve their products and expand their marketing efforts. And another major competitor is looming; Pandora's on-demand subscription will likely arrive some time this year. Company executives say they conservatively expect to convert 10 percent of the Internet radio service's 81 million monthly listeners.
Music subscriptions continue to be a two-horse race. Spotify is the market leader. Apple Music is comfortably in second place, ahead of Deezer, Rhapsody/Napster and South Korea's MelOn. Pandora could become a competitive third horse. YouTube Red, with exclusive video content and vast footprint, might make things interesting. It's not unimaginable these handful of companies could acquire another 40 million to 50 million customers in 2016.
These products are far from the mainstream. But it's finally starting to look like music subscriptions are gaining steam. Netflix, the main point of comparison for paid entertainment subscription services, currently has 75 million subscribers worldwide, added 17 million in 2015 and expects 6 million more in the first quarter of this year. While music services are far behind video services, it feels like they're (finally) starting to turn the corner.