Spotify unseats Pandora as the world's most popular music service

Spotify is now the most popular streaming music service in the world, according to a new report.

If you’re the kind of person who subscribes to a streaming music service rather than purchasing individual albums, you’ve got a lot of options: Pandora, Spotify, Apple Music, Google Play Music, YouTube Red, and more popping up all the time.

Pandora is one of the oldest services – it was founded in 2000 under the name “Music Genome Project” – and for many years it’s had more active users than any other service. But this week Spotify passed Pandora to become the world’s most popular streaming service, according to a report from App Annie, a mobile analytics firm.

In spite of its growth, Spotify isn’t yet turning a profit. The company lost about $80 million in 2013, down from a $115 million loss in 2012. Spotify says it’s seeking to build an active base of users first, and to convince users using the free ad-supported tier to pay $10 per month for premium subscriptions.

Both services barely edged over 75 million active users in 2015, with Spotify growing considerably faster than Pandora in recent years.

Pandora’s service fills a different niche: rather than offering users a way to search for and stream music, Pandora serves up radio stations curated according to users’ tastes. On Tuesday, Pandora chief executive officer Brian McAndrews argued in an op-ed published in Business Insider that Internet radio services benefit listeners and artists by allowing people to discover new music, but that on-demand streaming services such as Spotify “are driving down music’s intrinsic value by creating a ‘gray market’ ... where listeners can perpetually access licensed, free, on-demand music.”

“This problem is imminently fixable,” Mr. McAndrews says. “Limit free on-demand music to truly trial. Countless other industries successfully convert their consumers from limited-time trials to payments.”

For its part, Spotify is trying several different avenues to convince users to upgrade to paid subscriptions, from traditional advertising to a rumored video service similar to YouTube that would be available to subscribers. And a separate rumor suggests that Spotify might restrict the albums available to free users in order to provide an additional incentive to upgrade.

Pandora is still the top service in the US, thanks to its popularity among users on Android and iOS devices. Smaller services such as Deezer, Saavn, and Gaana are popular in France and India even though Spotify continues to grow in Europe and Asia.