Spotify to Earn Nearly $480M from Paying Subscribers

London-based tech and music company Spotify just announced they have 4 million paying subscribers. With a $9.99 monthly subscription fee, that means the company should garner annual revenues around $479.5 million from subscriptions.This is an impressive feat, made possible by the company’s increase in free members from 4 million to 15 million in a 10-month time. While the percentage of paying subscribers has dropped from 50% of free users to 27%, the actual number of paying subscribers has doubled in that time.The company also seems most poised to grow in the new online music environment. While paying subscribers can listen to music uninterrupted, free users are subject to occasional ads, a smart revenue stream for the company that monetizes their free content. In addition, Spotify allows users (free and paid) to play songs they want on-demand; competitors like Pandora and Rdio only let users create “stations” based on a song, artist or album and don’t allow for on-demand playing.Spotify and Yahoo also entered into a deal recently, which should help grow Spotify’s user base and subscriptions, especially since, currently, the only way to sign up for a Spotify account is through Facebook.

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