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Apple Music hits 60 million subscribers as it goes head-to-head with Spotify


  • Overview of the global music industry
  • Dominance and competition between Apple Music and Spotify
  • Road ahead as streaming services takes center stage of the music industry

 

The global recording music industry is reported to be worth at $19.1 billion as of 2018, registering a growth rate of 9.7% from that of 2017 growing at a faster growth rate than the previous year (7.4% growth between 2016 and 2017). Of the $19.1 billion, the most dominant segment, the music streaming market segment accounted for 37% of the global recorded music market as of 2018, registering a 32.9% rise from that of 2017. This has been fueled primarily by the rapid investment from record companies. While the facet of the overall global digital music industry is doing better than ever, registering a growth of 21.1% YoY, the other half of the industry (besides the streaming segment) is declining. Paid downloads dropped by 21.2%, representing a paradigm shift for the preference of streaming music instead. Similar to digital downloads decreasing, so were the physical purchases, which decreased by 10% YoY, as CDs aren’t just as popular as they once were. The other segment of the global music industry, performance rights, positively marked an increase of 10% YoY. With the global streaming revenue at a reported $8.9 billion as of 2018, it is safe to assume that the majority (more than 50%) of the total global streaming revenue are made up by Spotify and Apple alone. This is because the two companies have a strong foot hold in the United States’ market, which remains by far the largest market for the paid music streaming business.

While Apple Music and Spotify are not the only streaming services to choose from, they are the two biggest contenders and players globally in this segment of the music industry. The numbers of Apple Music subscribers still haven’t managed to outpace Spotify for now, but Apple’s streaming services continues to enjoy impressive growth. Apple Music has been known for its plethora of exclusive releases and its full integration with Apple’s iOS ecosystem, making it a tough competition for Spotify, which is almost a decade older than Apple Music. It is also worth noting the growing number of users outside the iOS ecosystem, Android users have also shown positive response to the Apple Music. As per data released by Sensor Tower, the number of Apple Music installs from the Google Play Store since its release in 2015 has an average new user of about 3 million per quarter, also hitting a record 3.8 million new users in the first quarter of 2019.

When comparing the two companies who have arguably contributed the most in revolutionizing the modern music industry, there are many features and offerings that make the two streaming services almost identical. Both the companies offer plans that are priced similarly at $9.99/month, $4.99/month and $14.99/month for individuals, student and family, respectively. The only difference is with the student plan which Spotify offers at $4.99/month and includes Hulu and Showtime services at no additional cost. Since Spotify has been in business much long than Apple Music, its services are being offered to about 100 million paid subscribers, while Apple Music has a subscription base of about 60 million. However, as per reports by Forbes, the increase in monthly rate of users for Apple is higher at 5% as compared to Spotify where the user numbers are increasing at a muted rate of ~2%. In addition, the number of songs offered by Apple Music is much higher at 50 million while the same for Spotify is 40 million, which depending on an individual’s musical preference could make a big difference in choosing the preferred streaming service.

As the music streaming surged in popularity, so has the number of companies that have stepped in to offer their own version of services. Among the competitors to Spotify and Apple Music are YouTube Music, Amazon Music, Pandora, Napster, Deezer and Tidal to name a few. Though the competition in the paid streaming services is fierce, there are two clear frontrunners – Spotify and Apple Music. Both of them combined have a total of about 160 million paid subscribers in an industry where the total paid subscription numbers are reported to be 255 million (as per report by International Federation of the Phonographic Industry). Although at a geographical level these two leaders may be having minuscule presence in a few countries/regions, however, as per reported number they are the leaders globally.

As the competition continues to intensify, it has been filled with allegations and complaints by players, in their fight to maintain a stronghold in the industry. In March 2019 Spotify filed a complaint with the European Commission alleging Apple with anti-competitive behavior. It accused that Apple, through its App Store has put the competitors of Apple Music at a disadvantage.

Spotify on its part is making serious efforts for growth by expanding it partnerships with Google, to utilize Google voice speaker, which the company sees as a critical area of growth. In line with this, consider its competitors such as Apple Music and Amazon Prime Music that have proved their own success in the music streaming with their Siri and Alexa. Besides, Spotify also has strategic partnership with both Samsung and Hulu for its music streaming services. Much to the added descent of Spotify and other players, Apple’s fiscal year 2018 numbers for its services business (includes Apple Music) recorded strong performance as it generated about $37.2 billion. The segment contributed about 14% of the company’s total revenue, registering an increase of 24% from that of 2017 and has been a point of worry for Spotify. Apple to start-off was more focused on its iTunes and selling the digital music downloads, until it recognized that people prefer being able to stream unlimited music without paying for all of it individually. This fits into the similar category of online movie and content streaming where companies like Netflix and Amazon amongst others have gained traction over the last few years. As competition intensifies in the industry with the players fighting for major market share, and while Apple Music has made some serious stride and recently ousted Spotify to become the most popular paid music streaming service in the US; Amazon Music Unlimited with its recent development has become a formidable contender with its premium subscription service growing by 70% (to over 32 million subscribers) in 2019 from that of 2018 as per Financial Times report; and YouTube Music (officially launch in May 2018) being considered by many as a streaming music platform to look out in future. But despite all the competitors as mentioned (and also the like of Pandora, Tidal, Deezer and SiriusXM to mention a few) rolling out its state-of-the-art features and collaborations, for now globally, Spotify still reigns supreme in the music streaming business. By the looks of the current scenario in the music streaming industry we could be looking at another face-off among Apple, Google and Amazon
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