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Spotifies May Steal Customers From Pandoras, With Facebook's Help

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Unlimited-access music subscription services will take almost a third of consumers’ digital music spending by 2015, analyst firm Gartner reckons.

Its finger-in-the-air forecast, above, anticipates revenue from services like Spotify, Rdio, Rhapsody and Mog will, some time in 2013 or 2014, surpass that from personalized music radio services like recently-listed Pandora (NYSE: P), which it reckons will decline.

It forecasts modest growth in a la carte digital downloads, which have already flat-lined in the States, and the highest growth coming from Latin America, the Middle East and Africa – an assumption that depends on the such services successfully launching to discourage music piracy there.

Alongside modest growth in global consumer digital music spending, Gartner sees a third ($5 billion) being wiped off global CD sales between 2010 and 2015 (release).

On behalf of unlimited-subscription music services, Facebook has now published growth figures they have experienced after ensuring their users’ listening habits are flooded out in to Facebook’s new live feed…

  • Spotify: “Added well over 4 million new users since f8.”
  • Earbits: “Saw a 1,350 percent increase in the number of users becoming fans of the band they’re listening to.”
  • Mog: “246 percent growth in Facebook users since f8.”
  • Rdio: “30x increase in new user registrations from Facebook.”
  • Slacker: “More than 11x increase in monthly active users in the month following f8.”
  • Deezer: “Added more than 10,000 users per day since finalizing their Open Graph integration.”

Spotify and Swedish multi-play telco Telia, which signed a deal to bundle the music service in October 2009, have renewed the arrangement for a second two-year period.

Subscriptions sold through Telia grew threefold in the last 12 months – a whole quarter of Spotify Premium subscribers in Sweden were acquired through Telia.

Record label bosses in Sweden credit Spotify and its Telia partnership, alongside piracy action, for reducing unauthorised downloading and helping restore revenue to the industry.

2 Responses to “Spotifies May Steal Customers From Pandoras, With Facebook's Help”

  1. Tom Silverman

    This is probably the most obviously wrong prediction I have ever see. 1. Digital downloads have not flatlined in the states, albums are up 20% and singles are up 11%. Huge growth. 2. A la carte downloads will never be big in emerging economies that have no history of real music purchasing. These markets will become access markets with phones being the main point of music consumption and “feels like free” imbedded “subscriptions” built into service providers offerings. These services will include tethered subscription downloads and streaming music and eventually video. 3.Facebook has added new sign ups but look at the ratio of MAU to DAU.  Actual use is a fraction of sign ups. Spotify will continue to grow but at the expense of illegal downloading and other “active” services.  Pandora and other “radio alternatives” will continue to grow at the expense of traditional radio and grow with the growth in smart phones, 4G and in-car connectedness. 4. These stated growth percentages are based on a numerator/denominator equation where the denominator is so small that a small absolute increase in numerator yields a huge percentage change.  Pandora has a huge denominator as does iTunes single sales.  Even a small percentage increase in these numbers  yields a very large absolute increase. 5. CD sales will continue to fall at 3% to 9% a year and will likely lose a third of their volume over the next 6 years as this “guess” predicts.  But they are not “over” as many pundits predicted only a few years ago. U.S. physical CDs are down only 7% this year after the closing of Border stores. Other countries are down even less.

    Watch for more data misinterpretation and misrepresentation over the next few years.