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Summary:

A report shows that music subscription service Spotify continues to grow at a rapid pace. The growth validates Spotify’s business model but is also inviting a growing cluster of rivals.

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Music subscriptions services, which provide an alternative to purchasing songs on sites like iTunes, continue to gain in popularity. One example is Sweden-based Spotify, which is expanding rapidly across the globe and has now added another 1 million paid subscribers in the last three months.

According to figures reported by CNET and confirmed by Spotify, the company now has 24 million active users and 6 million paying subscribers across the world. Spotify is also growing rapidly in the United States, where it arrived in July 0f 2011 and is this week hosting musicians at its “Spotify House” at the SXSW festival in Austin, Texas.

Despite the hype, the underlying economics of Spotify’s business model remain uncertain. The service is beholden to musicians and studios, which request a 70 percent cut, and it must contend with a growing list of competitors that include Pandora, Rdio and SoundCloud. Meanwhile, YouTube is expected to launch a subscription service of its own in coming months and even Apple is expected to get into the streaming game too.

This competition validates the underlying premise of Spotify — that people want access to a giant catalog of music instead of buying it piecemeal through iTunes — but the arrival of deep-pocketed rivals may hurt Spotify’s ability to compete in the longterm.

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  1. Mattaui Relvani Tuesday, March 12, 2013

    Rdio is one service that is directly pretty comparable to Spotify, but neither Pandora or Soundcloud are really the same kind of service. I guess they compete in that they play music, but Soundcloud in particular compliments more than competes with Spotify. For my own use case, I listen to streaming radio on services like di.fm, then I catch related live events that I might have missed when they’re posted to Soundcloud, but I do all my album and single listening through Spotify.

  2. This is good news that Spotify is gaining a decent sized userbase and will hopefully help them sign more labels to keep their catalogue full. Still waiting on Napalm Records to get back on board with their catalogue of Metal!
    Mark @ http://www.beatsuite.com

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