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Spotify hits 10 million subscribers

By Ben Sisario

New York Times

LAST UPDATED: 07:55 p.m. HST, May 21, 2014

Spotify, the streaming music service, said Wednesday that it had grown to 10 million paying global subscribers, a long-awaited disclosure as the company faces potential competition from Apple and also prepares for a probable initial public offering.

The numbers show rapid growth for Spotify, which offers access to millions of songs for about $5 to $10 a month, or free with advertising. The company, which is privately held, has doubled its customer rolls since December 2012, when it reported 5 million paying subscribers and 20 million active users in total.

That ratio of three free users for every paying subscriber has remained steady throughout Spotify's recent history. The service was introduced in Sweden in 2008 and came to the United States almost three years ago. When the company last reported customer numbers, in March 2013, it had 6 million subscribers and 24 million total users. On Wednesday it said that its total had grown to 40 million. Last month, Spotify announced a deal with Sprint to bundle its service with phone plans.

"We've had an amazing year, growing from 20 markets to 56 as people from around the world embrace streaming music," Daniel Ek, Spotify's chief executive and co-founder, said in a statement.

Among Spotify's many competitors are Rhapsody, Rdio, Deezer and Google Play Music All Access, and it may soon face a major challenge from Beats Music, an affiliate of the successful Beats Electronics headphone brand.

News recently emerged that Apple was in talks to buy Beats' audio brand and music service for $3.2 billion. Neither Beats nor Apple has confirmed those talks, but an alliance between those companies could put pressure on Spotify, which has been the biggest player in subscription music.

The music business has started to see streaming as its salvation, as both CD and download sales decline rapidly. In 2013, streaming services yielded $1.1 billion in income for the music industry. Still, many artists complain that the revenue is not trickling down to them in sufficient quantities to replace the larger royalties paid by CD and download sales.

Spotify, which has been valued by its investors at more than $4 billion, is said to be preparing for an initial public offering, although the company has declined to comment on these plans. Despite the company's success, doubts have persisted about how big Spotify and other all-you-can-eat subscription services can grow.

In its most recently reported financial results, for 2012, Spotify lost about $78 million on $578 million in revenue.

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