Spotify's Marathon

The news that Spotify’s mobile app is now available for the Android platform, coupled with an anticipated Autumn US launch, are both part of the music service’s inexorable rise and media interest.  Spotify undoubtedly has momentum and potential in abundance.  But, even without considering the issue of cash burn, it is also important to keep a sense of scale. Spotify has done a great job of acquiring a sizeable audience after a short period of time, but needs many more users before it can be considered on a par with some more established services that get a lot less attention (these days at any rate).

 

In the chart below I have mapped the number of users of Spotify and a number of other key free music services, each from launch.  What is clear is that Spotify has made a solid start is growing at a stronger rate than Pandora was at the same stage.  If Spotify ever reaches Pandora’s scale and business model viability, it will rightly be considered a success.

 

But it is also clear that other services like Last.FM and imeem grew more quickly.  And just to put the absolute scale of Spotify into perspective, the Pandora iPhone app alone is mapping almost exactly in line with Spotify’s entire user base. (No coincidence of course that Spotify see the iPhone app as a crucially important ticket to further success).

Monthly users of music services from launch4

So what can we conclude from these numbers? 

 

  • Extrapolating Spotify’s early user growth suggests that if it is sustained it could reach the 20-30 million user range within 2 years
  • A US launch will significantly accelerate audience growth (all of the other services mapped here have US reach.  imeem and Pandora have reached their scale in the US alone.)
  • Spotify will need to accelerate its revenue model maturation if it is going to be able to sustain this projected level of growth 

 

The last point is key. All of the other services in the chart have had to deal with the challenge of audience cost sustainability:

 

  • imeem has had well publicized financial difficulties with WMG writing off millions of debt.
  • Last.FM recently closed its free service to countries it couldn’t operate in profitably
  • Pandora closed its non-US operations when it couldn’t strike deals with rights owners that would enable it to operate profitably in international markets

 

Spotify has run a fast first lap, but it is a very, very long race.