Spotify Hits 10 Million Paid Users. Now Can It Make Money?

Why Spotify—and the streaming music industry—can't make money
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Spotify CEO Daniel EkPhoto Illustration by 731; Ek: Art Streiber/August
Daniel Ek has devoted most of his waking moments over the past few years to evangelizing about the glories of streaming music. He’s well suited to the task. In addition to a forbiddingly deep reservoir of knowledge about every genre and subgenre to emerge from his native Sweden, Ek, 31, is the co-founder and chief executive of Spotify, the first company to make streaming so easy that downloads quake in its presence.

Competition was inevitable in such a popular space, but when Beats Electronics launched its own subscription service, Beats Music, in January, it seemed more like a validation of Spotify’s model than a threat. The two companies offer the same basic service: a $10-a-month subscription that gives users the ability to stream songs from the company’s servers. Beats, started by Jimmy Iovine and Dr. Dre, doesn’t offer a free version, whereas Spotify has one supported by ads. The music industry, weary from decades of being tortured by consumers, has greeted streaming with skepticism. But in its tradition of acquiescing to the latest consumer demand and asking questions later, it’s also signed enough deals to make Spotify’s library pretty comprehensive.

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Spotify Hits 10 Million Paid Users. Now Can It Make Money?