Spotify Limits Boost Paid Users

The U.S. music industry was anxiously awaiting the arrival of Spotify. And now that it is here, numbers and stats are flying in all directions as execs try to decipher consumer reactions. MusicAlly.com has published some new information which shows the music platform successfully added paying subscribers as a result of implementing more restrictions on free usage.

The data is taken at the end of June, shortly before the platform opened in the U.S., and outlines performance from Jan. through June 2011. Music Ally notes that the data used in this report was not provided by Spotify, but is “according to a report prepared for a rightsholder and subsequently seen by Music Ally.”

The data shows the new curbs definitely drove paid subscriptions but at a price in overall usage. The service gained 520,000 paying subscribers between March and June 2011, but lost 1.6 million free users. The new rules, announced in mid-April and begun on May 1, shrunk the number of free listening hours per month from 40 to 10. They also added a five plays-per-song limit.

The article correctly notes that while the large increase in paying customers will please copyright owners who will share larger revenues, the question remains what happened to the one million users who left the system? Where are they going for music?

Hopefully not to unlicensed services.