Spotify Finds People will Pay for Something That’s Free

by January 12, 2015
Photo via Billboard.com.

Photo via Billboard.com.

Spotify may not be Taylor Swift’s BFF, but it’s proving something that may be crucial to the music streaming world. According to Fast Company, 25 percent of Spotify users pay for the product.

That’s a pretty spectacular conversion rate for a company that launched by giving its product away for free. Fast Company says  Spotify added 10 million new users in the final two months of 2014, bringing it to a total of 60 million active users. Of them, 15 million are paying something for Spotify.

The bump is probably due to a pre-Christmas promotion by the company, which allowed users to sign up for three months at 99 cents, as opposed to the usual cost of $9.99 per month.

Here’s what Spotify says in an official blog post: “We had an amazing 2014 at Spotify and owe it all to you, the music fans who listen, discover, share and celebrate music and artists with us every day of the year.”

That’s despite Swift’s decision in November to pull all her music from the site, save for one song. She said in a Wall Street Journal op-ed:  “Valuable things should be paid for. It’s my opinion that music should not be free.”

When Spotify last published its stats, it had 12.5 million paid users, with an active base of 50 million. That indicates the ratio of paid-to-free users is holding steady as the company moves beyond early adopters, Fast Company says.

It’s a little difficult to compare streaming companies, since they have different business models. But here are some estimates by the magazine:

Next up for Spotify could be an IPO. And perhaps Swift could someday be changing her tune about them.

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