While more people are streaming music, they’re still not necessarily paying for it. Spotify announced that it had 60 million active users by the end of 2014, but only 15 million are actually paying subscribers.
As Statista reports, it’s a 20 million increase in users from Spotify’s last announcement in May 2014, when its number of paying subscribers was at 10 million. But the fact that only one in four listeners pays for the service casts doubt on its ability to make a profit, as the statistics company points out: “It is unclear whether the company can turn a profit in its current state. The company states to pay back 70 percent of its revenues to the music industry, leaving it with 30 percent to cover all other expenses,”
Spotify announced that they had a lot to celebrate at the end of 2014, so much so that the company offered a promotion to sign up for its subscription service for 99 cents as an introductory rate. CEO Daniel Ek has echoed the music industry and other streaming services, contending that as more people get hooked on streaming, more will pay up.
Meanwhile, one Spotify rival, Seattle-based Rhapsody, said it had 1.7 million subscribers as of last April. Rhapsody also has continued to lose money, posting a net loss of $7.9 million in the third quarter of last year.
As overall streaming numbers continue to grow, and CD sales decline, vinyl is also making a small resurgence. As we reported earlier, Nielsen revealed that vinyl grew by 52 percent last year, topping 9 million albums sold in the U.S., but still only accounts for 6 percent of all physical sales.
What does this all mean? While people are happy to stream for free, perhaps they’re more willing to pay for something that’s considered collectible. The music industry has long been struggling with this: It’s hard to make people pay for something that’s readily available for free. It will be interesting, at the very least, to see how it continues to shake out.
