30,000,000 Million Free Users Can't Be Wrong

Hello, I hope y’all are doing well this week. Recently I got a number of new subscribers, so here’s a brief intro: I’m David Turner, a Brooklyn-based freelance writer, whose work has appeared in Music Business Worldwide, Rolling Stone, Slate, and many other places. Penny Fractions is my weekly newsletter centered on music streaming, where I write an essay and include links to stories about the industry. Last week I announced a new premium newsletter (Dollar Fractions), if that sounds interesting to yourself. Otherwise my email is pennyfractions@gmail.com, where I'm excited to get any and all feedback.

A question I often ponder—certainly more than any normal person should—is how many people actually pay for Spotify. An obsessive follower of streaming news will know Nordic countries, like Sweden where Spotify was founded, hold a higher density of people who pay for music streaming. Yet how does that shake out in other countries where Spotify doesn’t hold home field advantage? I ask because it might start to help give a sense of just how much Spotify might grow in the many markets it can’t yet be found.

Earlier this year, a source mention to me that in June Spotify’s United States non-paying user base hovered around 30 million users and that the total user base was around 52 million. Those numbers according to them put the United States around 31% of Spotify’s total user base, which for perspective at the time Sweden was a little over 2% and Brazil was just above 8%.

That little bit of information helped put together a thread that run through a number of reports from earlier this year on just how much more engaged Apple Music’s audience is compared to Spotify’s. Digital Music News in early July reported that Apple Music eclipsed Spotify in terms of premium users, specifically saying:

Both Apple Music and Spotify have more than 20 million subscribers in America, with Apple now a hair ahead.  The source requested that we withhold exact subscriber numbers beyond mentioning ’20 million plus,’ to protect confidentiality.

Now let’s apply some of these numbers to some recent streaming record numbers. In April, the North Carolina rapper J. Cole released his most recent album KOD and it arrived to 64.5 million streams on Apple Music and 36.7 million stream on Spotify within its opening 24 hours. According to sources in April the Spotify’s overall user base stood just shy of 50 million and judging by Music Business Worldwide’s own number crunching Apple Music user base in April was heading north of 20 million.

A bit of back of the napkin math shows for KOD the average number of streams per platform by every United States listener would’ve been: 3.2 plays per Apple Music user and 0.73 plays per Spotify user. Apple Music might be less than half the size of Spotify in the United States, but for J. Cole not only did he outperform but that occurred on the platform where he gets paid even more per stream. The rapper might hold million of monthly listeners on Spotify but at least for that single week, it was Apple Music that was really paying out.

This is even repeated worldwide where Travis Scott’s most recent album Astroworld in its first 24 hours globally was streamed 80 million times on Apple Music compared to 64.5 million times on Spotify. The same held up for Drake and his most recent album Scorpion which was streamed 170 million times in its first 24 hours on Apple Music and only 132 million times on Spotify. Earlier this year I wrote about how rappers love to post on Instagram the Apple Music charts but never Spotify—a note in Latin trap often promote their Spotify numbers—it just made more sense than Apple over the last few years was catering to the market most ready to stream music. That Apple is the clear winner on A tier rap releases shows perhaps their targeted marketing got the job done even with a smaller user base.

A Question Over Engagement

What starts to become rather clear is just how much Apple Music fans stream this music but also how many Spotify fans aren’t as deeply engaged in the blow-by-blow beat of modern music consumption. That in a way flies against a piece I wrote for Real Life Magazine about that particular thread that’s running in a lot of streaming music narratives:

The need to buy an album — off iTunes, much less an actual record store — has mostly vanished: Apple Music launched in the summer of 2015, around the time Spotify was starting to see major growth through its mobile app. The business model for music doesn’t require a must-have album, then, but rather a week-to-week narrative within the music world to justify a monthly subscription.

It’s hard to fully gauge how these Spotify consumers engage with music. An odd error in that style is an assumption there is some music every user will consume. A striking example was when Tidal got the exclusive Kanye West and Beyoncé albums, people leaped to contextualize the numbers assuming every user of the service listened to their respective albums, which was noted still didn’t quite add up. Where more likely a higher percentage than a normal did listen but certainly not 100%. Spotify due to its size is even more susceptible to this misreading. The reason is that Spotify’s overall user base is large enough that even Drake, no matter how much promotion, isn’t an artist 100% of the user base wants to hear. That raises up another qualm about how to contextualize streaming numbers.

Spotify likes to posit the company as the future of radio—their F1 filing mentions radio 36 times. That complicates how to understand streaming numbers because traditionally album sales and radio consumption were divided into different charts and metrics; the streaming era flatten that understanding. A Spotify user may be aware Drake put out a new album but they’ll only experience it on Today’s Top Hits with ads in between songs not unlike an average Top 40 radio consumer. Where Apple Music might have playlists but it also features plenty of visual real estate to promote albums. (A small note but Apple Music shows its album chart fairly prominently while Spotify doesn’t offer any ranking of that type.)

This might be why labels are a bit pushier towards Spotify over the issue of direct deals. Labels can start to sense the tide shifting from Spotify as Apple rises and Amazon and YouTube are in the wings. If Apple is already paying out more and outperforming on streams then at least for genres like rap, Spotify might’ve already lost the battle even despite their endless RapCaviar branding.

6 Links 2 Read

A New Spotify Initiative Makes the Big Record Labels Nervous - The New York Times

The Paper of Record finally reported on Spotify’s direct deals. The story bubbling up to the Times is noteworthy but I wanted to highlight the piece hinted at the fact labels are consciously using the press to duck out this confrontation, which isn’t a bad approach I must admit.

What Streams May Come - Slate

I was on Slate’s excellent If Then podcast last week talking about music streaming. The podcast is a pretty general discussion but I very much appreciated getting to think a little bit about how musicians are responding to this ever shifting industry.

Vine And Musical.ly Transformed the Music Industry Then They Disappeared Will History Repeat Itself? - Music Business Worldwide

Cherie Hu for Music Business Worldwide attempts to unpack lessons from Vine / Musical.ly in the space of music and technology and why so many companies struggle to sustain themselves in a niche that provides the early seeds of  many soon-to-be music industry stars.

The YouTube stars heading for burnout: ‘The most fun job imaginable became deeply bleak’ - The Guardian

A question I should ask is what is the music industry doing to address issues of mental health for artists. I’m not talking about raising awareness through songs or organizations to help others, but specifically what is being offered to artists signed to record labels to address the topic. I ask, because YouTube in stories like this looks to completely abdicate the lives of their creators even as its biggest stars cry out for help.

Game Changer? Spotify Inks Three Carrier-Bundled Billing Deals In Indonesia & Thailand - Digital Music News

The last couple weeks I’ve written how Spotify, and other streaming services, could just be rolled into a phone plan rather than a separate purchase. Well in southeast Asia, welcome to the future.

Anatomy of AI - Kate Crawford and Vladan Joler

I’m just gonna quote this one part for why you should read this sprawling textual and visual essay on the Amazon Alexa: “Just as the Greek chimera was a mythological animal that was part lion, goat, snake and monster, the Echo user is simultaneously a consumer, a resource, a worker, and a product.”