Spotify, the European all-you-can-stream music service American listeners just couldn’t wait to get their hands on, has been growing fast. Since its July U.S. launch, Spotify has picked up more than 250,000 paying American customers, according to Reuters. This number has grown by 42% since early August.
At the time, Spotify had 1.4 million American users, including non-paying listeners. That number has presumably grown considerably since the company launched a major integration with Facebook at the f8 developer conference last month. Spotify has not revealed recent statistics about its overall user base.
Still, the company is not turning a profit. That’s because even though its revenue is increasing substantially, the licensing costs it pays to keep its music library growing are huge and not easily offset by its current subscription and advertising revnue. Spotify lost more than $41 million last year, according to the Financial Times.
In recent weeks, we’ve seen competiting services respond to the apparent threat posed by Spotify by dropping the subscription fee for their entry-level subscriptions. Both MOG and Rdio launched free streaming services recently, both of them having originally launched starting at $5 per month. Spotify, on the other hand, went live in the U.S. as a freemium service.
Even if Spotify is still in the process of forging a business model that’s viable in the longterm, evidently it’s done a decent enough job of snatching up subscribers to cause its competitors to think twice about their own models.
