This article is more than 1 year old

This article is more than 1 year old

Spotify has reached 100 million paying subscribers, in a landmark for the music streaming service as it faces competition from major tech firms.

The number of users willing to pay for the service soared 32% in the first three months of 2019 compared with a year earlier, Spotify said on Monday.

The Swedish company, which listed on the New York Stock Exchange just over a year ago, said it was bolstered by a better-than-expected performance in North America, its second biggest market.

Spotify is in the middle of a battle for market share with music streaming competitors with deep pockets, including Google’s Play Music, YouTube Music, Amazon and Tidal, the service owned by Jay-Z, Beyoncé and other stars. Last month, Spotify filed a complaint against Apple with European regulators, alleging that the US tech firm limits choice and competition in its app store, giving its own music streaming service an unfair advantage over rivals.

The Swedish company, whose market value of about $25bn (£19bn) makes it one of Europe’s few large tech successes, has invested heavily in acquiring new users.

In March it agreed a deal with Samsung, the world’s largest phone producer, to pre-install its app on devices. Spotify has also gained 2 million users in India after launching there in February.

Free users, who listen to adverts between songs, still outnumbered paying subscribers at the end of the quarter, but the premium tier provides more than 90% of Spotify’s earnings.

In total, Spotify rang up revenues of €1.5bn (£1.3bn) in the first three months of the year, an increase of a third year on year. However, despite the increasing revenues, Spotify swung back into the red, with an operating loss of €47m for the quarter – after making a profit of €94m in the final three months of 2018.

India is one of the fastest-growing music markets and Spotify launched with an ad-supported option and a $1.67 monthly subscription, the cheapest rate offered by the music streaming servicein the 79 countries where it operates. Spotify charges $9.99 in the US and £9.99 in the UK.

On Monday, the company said more than one million users in India had signed up in its launch week and that figure had now more than doubled.

Observers highlighted the importance of the Indian market. Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “With customers outside Europe and the Americas accounting for just 10% of subscribers, the potential in cracking such a populous and potentially high-growth country would be huge.

“With rivals of the calibre of Amazon and Apple, Spotify can’t afford to rest on its laurels, but so far the group seems to be more than capable of holding its own.”

However, Spotify is about to lose 120,000 songs from Indian artists and Bollywood film soundtracks after failed negotiations with Saregama India, India’s oldest record label, whose catalogue generates more than 1bn streams worldwide each quarter.

So far this year Spotify has spent more than $300m buying three podcast firms: the true crime podcast maker Parcast; Gimlet, the firm behind Homecoming, which was made into an Amazon TV series starring Julia Roberts; and the podcast platform Anchor. Spotify says it plans to spend up to $500m in total this year outside music streaming.

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The company’s founder, Daniel Ek, believes that in the future up to 20% of all listening on the service will be non-music content. It is also a strategy to help move away from the dependence on music licensing deals, which are low-margin with the majority of revenues paid out in royalties to music companies.

The streaming revolution has helped the beleaguered music industry to get back on its feet after years of digital piracy, and the continuing demise of the CD.

In 2018, global music revenues grew at the fastest rate in more than two decades to $19.1bn, the highest level of income since 2006, when CD sales accounted for more than 80% of its worldwide revenues.

Music streaming services generated more than half of the income earned by record labels in the UK for the first time last year.