Credit: Apple

How successful is Apple Music?

The tech giant's subscription service acquires 10 million users in six months, but success is relative.

by Adam Gale
Last Updated: 02 Mar 2016

Late in June, a new music streaming service launched in a hundred countries. By the end of the year, it had acquired 10 million paying subscribers, giving it nearly half the market share of sector leader Spotify, which itself took six years to reach the 10 million mark. Had this been a start-up, it would have been widely applauded. But it was hardly a start up. It was the world’s largest company (unless the Saudis sell Aramco...), Apple.

Like Einsteinian physics, success is relative.  There are a billion iOS users worldwide, all of whom have easy access to Apple Music via iTunes, but according to the FT only 1% of them are subscribing to Apple Music. The US monthly rate of $9.99 (£6.75) meanwhile would suggest annual global revenues from the service of about $1.2bn – trivial compared to the $234bn Apple raked in last year.

When you also consider that the service seems to have lost a million subscribers since its three month free trial expired, it hardly seems like much for CEO Tim Cook to write home about. (Then again, it probably beats writing about the 19% drop in Apple’s share price since early December...)

This would be to miss the point, however. Apple Music was never going to revolutionise Apple as a business or suddenly convert all iPhone users to streaming, which is hardly new in tech terms. Launching it, however, will likely prove to have been a smart decision.

Apple is the dominant player in the dominant sector of music sales, downloads. But that sector is declining – by as much as 12% a year for individual tracks in the US according to Nielsen – as streaming becomes more and more popular. At a stroke, Apple has become one of the major players in that sector too (ahead of more established rivals Deezer and Tidal, which have 6.3 million and 1 million subscribers respectively), with a decent chance of taking the lead.

What is more, this is something it was able to achieve without too much cost or taking too much risk - it already had the necessary relationships with the music studios and platform to reach the customers, and the cost of paying artists for its three month free trial (thank you Taylor Swift) will hardly have eaten into Apple’s $200bn cash pile.

Apple may seem extraordinarily strong now, but looking to the future it is heavily dependent on the continued popularity of the iPhone. Projects like music or indeed smart watches may seem minor in comparison, but sticking its sleek aluminium fingers in a few more pies can’t be a bad idea – unless it’s content to bet the whole bakery every couple of years on a single product. Its streaming service may thus be a modest success so far, but it's the kind Apple needs.


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