Music Diary Notes: Spotify Has Early Success, but … a LONG Way to Go to that 50 Million Member Goal!

Over the weekend we got some initial data from the Spotify launch courtesy of Billboard, who cite ‘inside sources’ as estimating that in the first week or so after launch Spotify has 70,000 subscribers (i.e. people who pay). From the article:

In my travels last night and in emails this morning I had three distinct label/publisher execs confirm the same number: that @Spotify has right in the ballpark of 70,000 paid Stateside subscribers after only one week in business. It’s hard to put these numbers into context, but it would also be hard to call that anything but positive news for Spotify.

It’s hard to put into context because the larger subscription services like Napster and Rhapsody, which have hundreds of thousands of subscribers, launched years ago – not only is first-week data unavailable, but it would have come at a very different time in the history of digital music and the web overall. Rhapsody now has 800,000 paying customers and Napster reported 761,000 subscribers in its last quarterly filing before it was acquired by Best Buy in 2008. But obviously it took those two services years to reach those figures.

Probably better for context? This July 7 story showing each of the new crop of Spotify competitors at 100k or less.

Later, Billboard got a non-confirming confirmation from Spotify, who said:

“The launch of Spotify in the U.S. has exceeded our expectations in both the response to invitations for the free service as well as subscriptions,” – “We aren’t going to discuss numbers at this state but we are excited to be here and confident that Americans will love Spotify as much as they already do in Europe.”

I have two very different thoughts on this, so why not entertain both?!?

Spotify Is Off to a Great Start!

Launching in the US, Spotify had only two options – wait for an invitation, or pay a monthly fee upfront for an unknown service. The risk seemed fairly small since the service already had a reputation as ‘better than piracy’ and ‘an iTunes killer’ from those using it in Europe, and it was possible to sign up for a single month at either $5 or $10 and just cancel later.

It is also worth noting that neither of the two competing on-demand services – Rdio and MOG – have reached 100,000 paid subscribers as of yet, so at 70,000 Spotify is already in the same ballpark as those other services. Rhapsody has been in service for a decade and has just passed 750,000 subscribers, so it is clear that there is plenty of growth available.

Wait – 70k is the BEST They Could Manage?

My wife – who has no interest in streaming music, being an advocate of ‘if I want it I will buy it’ – had heard about the Spotify launch, as had millions of others. Spotify touted the hundreds of thousands of sign-ups for invites, and the launch was an event covered widely throughout the tech world and beyond. And yet with all of this supposed pent-up demand, Spotify could only muster 70,000 subscribers.

In addition, Spotify used a tactic specifically targeted to entice people to subscribe – they held back invites but allowed people to gain immediate access by paying. This should have meant that many who were ‘on the fence’ would have signed up in addition to us early adopter types. When you look at the level of free press Spotify has gotten – all positive – compared to MOG and Rdio, Spotify should have already buried those services, yet they didn’t.

By my estimation, it is potentially worse. I have neither numbers nor ‘sources’, but my intuition tells me that a large number of the 70,000 Spotify subscribers also subscribe to one of the other on-demand services, and will have to choose. And based on my experience so far, it is by no means a ‘slam dunk’ for Spotify!

What Does It All Mean?

I expressed two opinions for a reason – we have no real way of knowing what this means. Had they only managed a few thousand subscriptions or more than a half-million we could make pronouncements one way or another, but not at 70,000.

On the one hand it looks promising, shows there is interest on the level of other subscription services, and that folks are willing to pay. But on the other it seems rather low for such an anticipated service. And the reviews have been solid but many have shared my feelings that missing stuff seems glaring, search can be useless, and the overall experience is not fully polished or up to snuff compared to other services yet.

The real tale will be told in the coming months, as people have more time, and need to decide with their wallets. Then we will know how Spotify has done with consumers – will they stay, or will they leave. Will others flock to Spotify or to other services?

Have you tried out Spotify yet? What do you think?

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