Spotify has 3 million paid subscribers, 20% of active user base

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Music streaming service Spotify has reached 3 million paid subscribers across the 12 markets it currently operates in. The figure, revealed at a recent event by chief content officer Ken Parks, means that more than 20% of its "active" user base is paying every month for ad-free unlimited listening or access to the company's song catalog on smartphones -- the ad-free option is $4.99 per month or $9.99 on mobile devices.

The 20% figure is up from 15% in March 2011, and Spotify says that its active users don't include folks who signed up for a free trial of a premium plan but didn't buy a subscription or continue to use the free service afterwards. The company believes that the Facebook integration and month-long free trials for premium subscriptions helped boost its conversion rate, though the service's caps on the amount of free ad-supported listening certainly played their part.

Though initially offering 20 hours of free, ad-supported listening, Spotify changed that to six months unlimited listening for new sign-ups, after which users are restricted to 10 free hours of music per month and five plays per track. The Anglo-Swedish service also recently unveiled support for apps and a revamped Spotify Radio feature on its desktop client, offering customizable streaming audio similar to Pandora.

Spotify played up the fact that half of its paying customers are under 30, which is a remarkable number of people who are generally hard to monetize. It goes to show not only that their model works, but that piracy is more a problem of price and distribution rather than draconian laws and enforcement.

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