spotify-24-million-active-6-million-payingWhenever a new music service is launched without a free listening tier that is supported by ads, it tends to be criticized, such as Beats Music and Tidal where free listening is usually only subject to a trial period. However free music does benefit the listener and not so much the company providing the service as evidenced in Spotify’s recent management report.

According to the latest report which was written by directors Martin Lorentzon and Pär-Jorgen Pärson, it turns out that only 25% of Spotify’s listener base are actually paying for the Premium subscription. This in itself isn’t too surprising since we guess many users do enjoy free music, but what’s surprising is the fact that 91% of the company’s income comes from this 25%.

Yup, you read that right, it turns out that the minority of Spotify’s listeners actually accounts for most of their income. This seems to suggest that despite relying on ads to help generate revenue from the free listening tier, it isn’t really doing much for the company which according to the math, pulls in about 9% of their income.

In fact this revelation seems to support the idea that perhaps music streaming companies should do away with free streaming, either that or find a way to make subscription cheaper to encourage a higher adoption rate, which is what Spotify has recently done by lowering subscription to $0.99 for 3 months as part of a promotion.

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