Spotify reaches 3 million paying subscribers

Spotify has reached a new milestone, hitting 3 million paying subscribers, up from 2 million in September and 2.5 million in November. The conversion ratio of paying subscribers has also increased, with the new figure representing 20 percent of Spotify's active user base, whereas that ratio was 15 percent last March.

The new numbers are a good sign for Spotify and help to reassure the music industry that this model works. Spotify operates as a freemium service that allows both ad-supported free accounts and paid premium accounts, all with unlimited playback, although it recently implemented monthly caps on the free accounts.

The new 20 percent ratio doesn't include people that have tried Spotify but then trailed off. And Spotify believes that its Facebook integration and month-long free trials for its premium service have helped boost its conversion rate. Currently, Spotify offers an ad-free option for $4.99 per month and an ad-free option that also allows for use on mobile devices for $9.99 per month.

"We have achieved some pretty great results in terms of the ratio of paid users," said Spotify's US managing director Ken Parks. "We have an enormous internal effort to drive conversion and engagement with the service. We are very focused on growing in our existing 12 markets as well as expanding in other markets."

[via Financial Times]