Apple Music Would Most Likely Exceed Spotify in the US

Apple’s subscribers in the United States have increased by about 5 percent per month compared with 2 percent increase for Spotify

Months before the forthcoming public stock offering, Spotify AB’s leading role in the music streaming market in the United States started to decrease.

Apple’s competitive service, Apple Music, is adding new subscribers in the U.S faster than Spotify and would probably become the leader in this service in the summer, according to the Wall Street Journal, which quoted sources familiar with the data performance of both service providers. 

Spotify is considered a global, dominant force in the streaming world and Apple takes the second place, however, there is a big difference. Spotify is bigger with its global presence and it continues to grow slightly faster than others. However, the second largest music service provider is quietly gaining strength on the biggest music subscription market in the world, indicating that Spotify has already got significant competition.

Allowing streaming services onto the market, stimulates the recovery of the music-record Industry after years of decline following the decrease in sales of CDs and most recently of downloading music. Customers of the streaming service pay a monthly fee or listen to advertisements in exchange for unlimited access to huge music catalogues and if users want to download, they pay once for the individual songs or albums to permanently own them. Paid subscriptions generated up to 61 percent of the revenue sources for record companies in the United States during the first half of 2017.,according to data from the Recording Industry Association of America.

Streaming music has not yet proven to be a viable business, because the technology companies which provide these services are experiencing difficulties to turn this into a profitable business. Active users and paid subscribers are the most scrutinized indicators, while these services are increasing.

Apple’s subscription database in the U.S is rising by about 5 percent per month, compared with Spotify’s 2 percent growth, according to sources familiar with the data. If we assume that the growth rate continues, Apple will surpass Spotify’s subscribers this summer.

Apple’s popular devices help the company to add subscribers to their music service which has been already pre-loaded on all iPhones, Apple’s Watch and other hardware that the company sales.

One of the questions, which the industry is yet to answer is, what indicators should Spotify reveal after becoming a publicly traded company. Spotify periodically releases data about its global subscriptions and only in the last month reported a new record of 70 million subscribers.

Apple Music clarified for The Wall Street Journal that it already has 36 million subscribers, in comparison with the 30 million, which were recorded last September.

The subscription database has increased for both companies, taking into account the individual users who are part of the family plans and people with promotional subscriptions, included in other services. In some countries mobile phone plans may include Apple Music subscription and Spotify offers students in the United States subscription plan that includes Hulu video service. Neither of the two companies publicly provides data for the United States or other single markets.

Under their licensing business deals, record labels allow streaming services to pay low fees for music if they meet certain objectives for subscription rate growth. As part of the business deal, streaming services are required to record how many accounts they have, a number that is not hiked up by the numerous users in a family subscription. They also have to take into account the monthly number of active subscribers which they have by removing the people who are registered in the package deals, but do not use the service and would likely be disappointed by it or refuse to pay.

There is one aspect in which Apple Music has surpassed Spotify. If we add those who are still within the free subscription period or within the seriously reduced trial periods, which lead to a paid subscription, Apple Music has a slight advantage over Spotify in the U.S market, according to sources familiar with the data.

Apple Music has three to four times higher number of such users than Spotify, partly because it doesn’t offer free service. Moreover, all Apple Music subscribers are automatically entered in the free three-month initial period. If we exclude those users, Spotify is ahead in the count, but not much and this gap is narrowing.

Apple’s segment services, which include Apple Music as well as App Store and its paid services, were greatly monitored by analysts during the company’s presentation of its quarterly report published last week, as it recorded 18 percent jump in revenues. It is not clear how much Apple Music contributes to this increase, as the company does not provide results for the streaming service.

Launched in 2008, Spotify allows its users to listen to a library with more than 30 million songs made to order. The company started offering the service in the United States in 2011. Customers who pay $9.99 per month can listen to music without the advertisements. Users of the free version have to put up with the advertisements and have a more limited options of choosing the order in which to listen to the songs they choose. In June Spotify announced that it has 140 million active users worldwide. Spotify has never reported any profits, however, the company states it would be able to make a profit after accumulating enough users, but it does not specify how many they have to be in particular.

Apple Music, launched in June 2015, allows its users to listen to music online from a catalogue of 45 million songs or to play music through their own iTunes library. It has individual subscription of $9.99 per the month.

Both Spotify and Apple Music offer a special offer of $4,99 per month for students and family plans of $14,99 per month and they can be used by up to six people.

Spotify is available in 61 countries including the U.S and Apple Music is available in 115 countries.

This week Apple will start selling its voice activated HomePod speaker, while trying to distinguish itself from previous devices offered by it competitors and promises better sound quality. The device is advertised as means to listen to Apple Music directly, while other services for streaming music can be played only through Apple’s AirPlay. Launching HomePod on the market has the potential to increase Apple Music subscriptions.