Following Spotify’s announcement that it had reached 200 million users in 78 countries, the most interesting fact about last week report is that among the 200 million active users of the platform, 96 million are paying subscribers.
Spotify’s 2018 year-end report, shows that the music streaming platform closed its fiscal year with 96 million Premium subscribers, producing thou an annual acceleration of 23 to 25 millions paying account users. Now, looking at the forecasts, Spotify is willing to close the first 2019 quarter with 97 to 100 million paying users, and by the end of 2019 fiscal year with 127 million paying users and a overall 265 million users.
The increase of Premium accounts is due to the improvements in the payment plans now offered, such as the Family Plan, which has increased by about 11% compared to 2018 data, or the student plans. Additionally we cannot skip to mention the entire location and market expansion, including emerging markets such as Middle East, Africa and South America.
Although all this data is excellent news to find out that the music industry and the freemium model is converting general users into paying accounts, to avoid interruptions by advertisement, there is a data in this year’s accounting which has not raised but instead it has decreased, which is the Average Income per User (ARPU), that has dropped in 2018 by about 7%, being $5.50 in the last quarter.
As a conclusion, we observe that the number of paying accounts are growing, because the users use more affordable payment plans, making the recollection of royalties and the ARPU also lower, since the payment for each play is not the same if produced by a free account, a student, a familiar account or the oficial Premium account.
To add more news into this, last week Spotify also announced the acquisition of two podcasting companies. It is known that Spotify wants to go deeper into the podcast market and they are willing to mark a difference by acquiring companies as Gimlet and Anchor, offering more the 185.000 titles available.