Spotify has announced that its total monthly user base has surpassed 140 million, helping it maintain the top spot in the music streaming business.
Spotify Is Nearly Twice As Large As Pandora And Apple
Spotify's larger install base will likely make it even more difficult for Pandora to catch up. Advertisers are likely to pay more for time on Spotify than they are on Pandora, as Spotify has said that they've seen a 50 percent growth in advertising revenue every year since their free model was launched.
Pandora, its closest competitor in the ad-supported space, has 81 million monthly active users. Even Spotify's premium service is doing better than the competition. Apple Music, which launched in 2015, has about 27 million subscribers to its service. Spotify, on the other hand, has 50 million.
Unfortunately for Spotify — and others in this industry — growing subscriber numbers don't necessarily translate to profits. According to financial documents released to EU regulators, Spotify has seen its sales jump by 2.9 billion Euros, but its operating costs have also increased by 349.4 million Euros.
Spotify's Effect On Artists
While Spotify and similar services are great for consumers, it doesn't necessarily mean they're a good thing for artists. Artists tend to make much more money from album sales than they do from streams due to the low pay offered by Spotify and similar services. In order to equal the sale of a single album, an artist would need to get thousands of streams on Spotify.
Of course, everything isn't so black and white. A 2015 study showed that Spotify's effect on the music industry was neutral due to the fact that the company's policy of paying 70 percent of their revenues back into the music industry. The problem is that many artists say record labels are taking most of this money for themselves. While Spotify may not be harming the music industry as a whole, it does appear to be harming artists.
There is an argument to be made that Spotify allows smaller bands to increase their exposure and find new audiences. However, in terms of raw numbers, YouTube appears to be better for that thanks to the ease of sharing videos and a larger install base. It is estimated that nearly a billion people use YouTube as a free music streaming service, though YouTube has not revealed those numbers.