Spotify fails to attract paying users

We all moan about obnoxious Spotify ads and pound our keyboards in frustration when we’ve maxed out the listens of our favourite song, but according to figures, this isn’t enough to make us cough up the money for a paid account on the music streaming service.

By the end of 2011, only eight per cent of Spotify’s 32.8 million registered users were subscribed to one of the company’s two product offers, reports The Telegraph. This meant 2.6 million were either paying for the ‘Unlimited’ package at £4.99 a month, or the ‘Premium’ account costing £9.99 per month.

Spotify Unlimited removes all advertising and limits on the tracks you play. The Premium goes substantially further, adding the service to your mobile, enhancing sound quality, offering unlimited travel access, and it even allows you to listen when offline. But the small uptake on these subscriptions means 85.3 per cent of Spotify’s total revenue relies on just eight per cent of its user base, as revealed by its financial report for last year. The majority of the remaining earnings came from advertising revenue.

It was expected that the Swedish company would attract a far greater number of paid-up members, particularly after its US launch just over a year ago. The stunted growth of its premium services has hit overall finances, with the firm recording a £35.9 million loss in 2011, according to the BBC. Though much of the loss has been attributed to the heavy costs involved simply to sustain its library, with record labels demanding high fees for their music.

Shedding a positive light on Spotify’s situation, a company spokesperson told the Telegraph, "Offering both a basic free and fully-featured paid-for service has been instrumental to what we've achieved so far, both in fighting piracy and convincing millions of people to pay for music.” The spokesperson described Spotify’s user base as “a pretty phenomenal following for a music service still in its relative infancy. 2011 saw us continue our focus on bringing an unrivalled music experience to a global audience. We're building for the long-term."