When Spotify launched three and a half weeks ago we wondered if it could compete with the already saturated American cloud-music scene. Well the numbers are in and it looks like the Swedish-based company is off to a promising start, reports AllThingsD's Peter Kafka. "The streaming music service has already signed up 1.4 million U.S. users for its free trial, according to a source familiar with the company’s operations." Spotify also has 175,000 paying U.S. subscribers, reports Kafka, which is perhaps an even more telling number. It's still early to tell if Spotify will overtake the American music scene, but as an early indicator, the numbers are promising.
Spotify has already surpassed competitors MOG and Rdio, who have yet to reach 100,000 users after a year on the market, reports SlashGear's Riu Lue. Compared to the leading service Rhapsody, which has 800,000 paying subscribers, that 175,000 number seems small. But, as GeekWire's Todd Bishop points out, Rhapsody has time on its side. "Rhapsody has been operating in the U.S. for years, previously as part of RealNetworks. Spotify has been here for less than a month." You also have to take into account that Spotify has run an invite-only launch.
If Spotify keeps up the pace, the company will definitely have a winning year, explains Business Insider's Matt Rasoff. "At that rate, Spotify is on track to top 20 million free subscribers and--more important--3 million paying subscribers in its first year, which would put it in easy first place among all music subscription services." Of course, after the initial shine wears off, things could change, warns Rasoff. "Also, adoption rates could slow after six months, when the company's policy of offering unlimited free songs to Web-based visitors might end."
These figures don't even come close to the company's European presence--the Spotify has seen a better free-to-paid conversion rate in Europe: 15 percent, compared to the 12.5 percent in the U .S. But Americans have less of an incentive to pay for the service than Europeans, argues Kafka. "During the company’s six-month launch phase, the U.S. version of the free service gives users more music than the European one does. The main reason to upgrade to paid is to get access on iPhones and Android handsets, for $10 a month." This could explain these lower numbers.
Spotify's strong start and media heavy launch haven't gone unnoticed by competitors, either. Hoping to capitalize on Spotify's publicity, Rdio has chosen to differentiate itself in the app store market, reports Kafka. "[Rdio] has made an interesting move: It is going to continue marketing its service via Apple’s iTunes, while raising its prices--for customers who sign up via its mobile apps--from $10 to $15 a month in order to comply with Apple’s new subscription rules and fees." Spotify, on the other hand, took its links out of the Apple store. While these numbers don't prove that Spotify is dominating, they show the service can certainly compete.