Spotify Eyeing Expansion in Latin America
Music-streaming service Spotify is eyeing an expansion into Latin American markets, and the way to do that, the company says, is by integrating itself into consumers' phone contracts.
Spotify elaborated on its plans during eMerge Americas, a technology conference held in Miami at the beginning of May. The company already operates in 17 Latin American countries and growing revenue streams show the area to rake in 15 percent of Spotify's global business. Despite the fact that Spotify just launched in Mexico, the country is already a top-fiver among Spotify's 58 global markets.
"It's close to becoming bigger than Germany," Gustavo Diament, Spotify's managing director for Latin America, told Reuters during the conference.
Reaching more customers, however, is the key, and things work a little differently in Latin America. Consumers there tend to gravitate towards services and subscriptions that are built into their phone contracts rather than pay a number of separate bills.
To this effect, Spotify is looking to embed itself into phone plans, offering customers a shot at their premium services for just a few dollars per month more. Spotify is even offering itself for cheaper, with the going rate around $5 for the ad-free version. Users in the United States have to pony up $10.
Spotify claims it had passed 60 million active users at the end of 2014, with 15 million of those being paying consumers. The company has already started pushing its efforts by landing deals with carriers to include Spotify in its phone contracts, meaning that customers in some cases won't even have to bother selecting the optional music service.
"This allows for mass consumption that couldn't happen if the user had to pay with a credit card, as happens in the United States," said Leila Cobo, Billboard's executive director of Latin content and planning.
Spotify has come under fire recently for the sparse royalties it doles out to musicians. Many in the industry claim it's far too little, with noted artist Pharrell Williams barely making $3,000 in songwriter royalties from 43 million plays of his smash hit "Happy."
"We've paid more than $2 billion to rights holders, but we paid that to record labels," Diament said. "We need to work with the artists and labels to determine how these funds are paid and distributed."
Spotify is also rumored to be launching its own online video site to compete with YouTube. The new service is expected to be revealed May 20.
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