For Spotify, a Cool Million Paying Subscribers

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Spotify, the red hot online music service has gone past the one million subscriber mark — making it one of the more successful online music start-ups in the business. The company has raised $113 million and is said to be getting a fresh slug of money — $100 million or so — and is valued at over a billion dollars. The company is likely to make that news announcement tonight. Spotify users have put together 200 million playlists so far.

Daniel Ek, a founder and the chief executive officer of Spotify says that getting past the one million paying subscriber mark in two years is a testimonial to the power ofits freemium model. The ratio of paying to subscribers to active free subscribers of Spotify’s music service is about 15 percent. Spotify is trying to find its way into the US market.

In a blog post, Ek noted:

‘It seems like only yesterday we were hatching ideas for a new music service in a tiny office-cum-apartment with a broken coffee machine, and the party we threw having reached one million users almost two years ago today was one to remember. So it’s with a sense of real pride and excitement that we can announce a new milestone today, having welcomed our millionth paying subscriber to the service.

In November 2010, it was reported that Spotify had about 650,000 paying subscribers. Using  back of the envelope calculations, it seemed that Spotify brought in around $135 million in revenues in 2010.

The rough estimates I had used showed that the company was adding about 42,000 paying subscribers every month. It seems new monthly subscriber growth has almost tripled. In three months since, the company seems to have added over 350,000 subscribers.

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