Announced on the official Spotify blog this week, the music subscription company has extended the unlimited listening period from the original six-month length stated in the Terms of Service to an indefinite amount of time. Spotify states “Well, it’s now been 9 months since we launched in the US. Time sure flies when you’re having fun! To celebrate, here’s some great news… We’ve been so overwhelmed by the US response to Spotify that we’ve extended the honeymoon for unlimited free listening.”
Previous to this announcement, the Spotify Terms of Service had indicated that users would be transitioned to a “a cap of 10 listening hours per month and a cap of 5 plays per unique track,” thus eliminating unlimited music for all early adopters. This policy was designed to encourage Spotify users to upgrade to one of the two tiers of premium service which both offer unlimited listening.
Also mentioned within the blog post, Spotify is still offering 30 days of free Spotify Premium service to users. The cost of the service is $9.99 a month after the free-trial offer and it allows users to listen to music on mobile devices, access music encoded at a higher quality bitrate and download music for listening when offline.
During January 2012, Spotify management updated the subscription numbers and indicated that the music service had three million paying subscribers. Spotify also stated that the company converts approximately 20 percent of the user base into paying members, thus the entire user base was likely around 15 million users during January. While Spotify officials haven’t indicated how many subscribers are on each premium tier, they did mention that the majority of customers are on the $9.99-a-month Spotify Premium plan. For instance, if 75 percent of users are on the Spotify Premium plan and 25 percent are on the Spotify Unlimited plan, the company would be collecting approximately $26 million a month from users.
Since Spotify pays record labels a specific fee each time a song is played on the service, it’s likely that the company is generating more revenue from advertisers to support the 12 million, non-paying users. Spotify management is also looking into more revenue streams from e-commerce such as collecting fees from tickets purchased to concerts through Spotify or third party services.
Outside of the United States, Spotify is also lifting the five-play limitation on songs for all users within Sweden, Finland, Norway, the Netherlands and Spain. The limit was put into place during April 2011 in Europe. While the five-play restriction has been removed, users are still subject to the 10-hour limit per month if they have exhausted the six-month trial period of the free service. Unfortunately for Spotify users in the UK and France, the five-play limit is still in effect.
According to a recent article by PaidContent, Facebook has been an extremely influential driver to recruit new Spotify users. After Spotify integrated Facebook’s frictionless sharing tool with the music service, new people are discovering Spotify as music is being shared within the Facebook news feed and ticker. According to Spotify chief content officer Ken Parks, he stated “Users who are exposing their listening on Facebook are three times as likely to become paid subscribers.”