Let's talk


January 14, 2016 | Authored by: Vindicia Team

Apple Music reaches 10 million paying subscribers

Streaming music service Apple Music just launched in June 2015, but it is already growing quickly. According to Financial Times, the platform has already amassed 10 million paying subscribers - a number it took Spotify six years to reach. Currently, Spotify has about 30 million paying subscribers, Business Insider estimated. While Spotify still outranks Apple in terms of paying subscribers, it's unclear whether this will last.

In an interview with Financial Times, Mark Mulligan, a music industry analysis with Midia Research estimated if Apple maintains its current growth rate, it could overtake Spotify as the leading music subscription service by 2017.

This is an exciting time for streaming music services, but this environment bodes well for many companies who hope to monetize on-demand content with the help of subscription billing.

"Apple's quick success might be a sign of the times."

The rise in music streaming
What's the reason behind Apple's astronomic rise in the music streaming world? While it could be superior brand recognition, It could also simply be a sign of the times. In fact, Jonathan Prince, Spotify's head of communications told Business Insider their brand also achieved significant growth during the same timeframe.

"The second half of 2015 was our fastest subscriber growth ever," Prince said.

When Spotify launched its service, streaming music had yet to take hold. Now, it has become the primary way people consume music, which means there was a faster adoption rate for Apple's service than when Spotify launched in the U.S. in 2011.

According to Nielsen's "2015 U.S. Music Year-End Report," music streaming took off in the past 12 months. On-demand audio streams grew 92.8 percent between 2014 and 2015, while music-related video streaming grew 101.9 percent.

What matters to music subscribers?
There are a few primary elements that are important to gain paying subscribers to a streaming music service.

  • Cost: It's always hard to convert free users to a subscription service.Not surprisingly, most music consumers are price averse, and 83 percent indicated cost was their primary driver for picking a streaming service. 
  • Usability: Ease of use ranked second at 82 percent. Listeners want to be able to access music via multiple devices. This is likely one of the main concerns for free users and an important consideration for convincing members to upgrade to paying subscribers.
  • Catalog: Content remains one of the top deciding factors in whether users will adopt to a service or not. Apple's offerings closely compare to Spotify's, with roughly 30 million songs, according to Digital Trends. Nielsen found 73 percent of users cite song library as one of their reasons for selecting a streaming service. The service also found 70 percent of music streamed was at least 18 months old.

There are other features to keep in mind as well, such as social connectivity and music discovery options - both of which are important to many users.

Still, overall, only 9 percent of respondents indicated it was likely they would pay for a streaming music service in the next six months, and the reason is price. Forty-six percent indicated streaming services are too expensive for them. While no platform will ever convert most of its free user base, there are ways to remain price competitive.

Since Apple Pay and Spotify both charge about $10 per month to use their premium service, the key differentiator might lie in the ability to create dynamic, personalized offers using a subscription billing platform. To be successful, it will be crucial that brands can reach out to users at the right time with promotions that can convert them into paying customers.

About Author

Vindicia Team

Vindicia Team

We value our subject matter experts and the insights each of them brings to the table. We want to encourage more thought leaders to come together and share their industry knowledge through our blog. Think you have something interesting to contribute as a guest blogger? Contact us at info@vindicia.com