Music Fans are Starting to Pay For Spotify: Freemium Model Pays Off

By Karla Robinson
January 31, 2012

According to a recent article by the Financial Times, over 3 million people are now paying to use digital music service Spotify. It seems the company’s freemium business model was successful enough to start converting users to subscribers.
“That’s a conversion rate of more than 20 percent, a figure that has reportedly increased by 5 percent since the service hit 1 million users last year,” explains ReadWriteWeb. “In other words, not only is Spotify itself growing, but the rate at which people sign up for a premium or unlimited account is also increasing.”
Successful Facebook integration — and the first wave of six-month unlimited free music windows coming to a close for early adopters — have worked to expand usage and the number of paying customers.
The music labels are content to continue working with the service for now, but some artists have started questioning its value as they receive low royalty fees.
“Sure, it’s a great way to promote one’s music, but it may not be economically advantageous for artists, especially if it ends up hurting record sales,” suggests the post.

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