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Online music service Spotify hit 10-million subscriber milestone

Launched in 2008, online music service Spotify announced that it has reached 10 million paying subscribers. Most of Spotify's 40 million users in 56 countries choose to listen to the advertising-supported service for free whereas subscribers spend $10/€10 a month to listen music free of advertising.

Record companies claim they generated $1.11 billion from subscription services last year, up 50% from the previous year, according music industy association. Spotify says it has paid out a total of more than $1bn to rights holders since its inception six years ago.

In light of Spotify's announcement of its milestone, market analyst Futuresource Consulting has provided a round-up of music industry movements.

Consumer spending on global music subscription services such as Spotify and Deezer was estimated to be just under $2 billion in 2013. But David Sidebottom, Senior Market Analyst, believes there is still significant potential for the market to grow.

Music subscriptions accounted for just 10% of the total music market spend last year, equivalent to around 25% of the digital music market. This is expected to exceed $5 billion in 2017, equivalent to 30% of global music market spend. In comparison, spend on online video subscription services such as Netflix last year was almost $5 billion.

In Sweden, music streaming accounted for around 70% of total market spend in 2013, up from around 20% in 2010.

Many consumers are moving away from ownership towards an access model, for both music and video. Total "pay per download" e.g. track and album downloads from services such as iTunes, declined in the USA last year, significantly down in Sweden and stabilising in the UK.

"Some consumers are changing their behaviour and this is impacting ownership, although most music buyers are still in the transition somewhere between buying CDs, buying digital tracks and albums - with the final step paying for a streaming subscription service such as Spotify," says Sidebottom.

Paid-for streaming subscriptions are increasingly driven by in-home wireless audio products, such as wireless speakers (e.g. Sonos) and integrated Hi-Fi with airplay, Bluetooth and the like. Global shipments of wireless home audio products grew by over 100% in 2013 to reach 27 million units. Futuresource's latest Living With Digital consumer research indicates that owners of such devices are 2.5 times more likely to pay for a digital music subscription compared to the overall population.

Story filed 22.05.14

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