Apple Music breaks through to 30 million subscribers

Posted:
in iPod + iTunes + AppleTV
Apple Music has topped 30 million paid subscribers, Apple confirmed on Thursday, supplying background for an interview with executives Jimmy Iovine and Larry Jackson, and Beats 1 DJ Zane Lowe.




The service hit the 27 million milestone around the time of June's Worldwide Developers Conference, suggesting growth of roughly 1 million people per month since. In reality that growth has likely been uneven, perhaps surging around the release of new products such as 10.5- and 12.9-inch iPad Pros, and more recently the iPhone 8 and iPhone 8 Plus.

Apple's growth still leaves it well behind the leader in on-demand streaming, Spotify, which broke the 60 million paid barrier in July. Still more listeners are believed to be on the company's ad-supported free tier.

"I don't believe that what exists right now is enough," Iovine said in the Billboard interview. "I believe we're in the right place, we have the right people and the right attitude to not settle for what exists right now. Just because we're adding millions of subscribers and the old catalog numbers are going up, that's not the trick. That's just not going to hold," he commented.

Iovine has previously complained that artists aren't being paid well enough by services with free tiers, like Spotify and Pandora. In the Billboard interview, he noted that streaming services are often riding on money from older music catalogs -- which can be cheaper to license -- while simultaneously faced with competition from free platforms like YouTube.

"I just don't think streaming is enough as it is," he elaborated. "I don't agree that all things are going to be OK because Apple came into streaming and the numbers went up. Look at the catalog: It's a matter of time before the '60s become the '50s and the '50s become the '40s. The people that are listening to the '60s will die -- I'm one of them. Life goes on. So you have to help the artists create new stuff that they would never be able to do on their own."

Apple Music has focused heavily on offering exclusives, including videos and albums, though the latter are usually just temporary before they come to other platforms. It's not yet known if Apple will bring its slate of TV dramas to the service, or air them elsewhere.
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Comments

  • Reply 1 of 36
    slurpyslurpy Posts: 5,147member
    So, Apple wasn't even in the streaming music business a couple of years ago. Today, they already have 50% the amt of paid customers as the most popular streaming service in the world which has been out for MANY years longer. That's a massive win, and numbers will only increase from here. For anyone in the Apple ecosystem, Apple music delivers tremendous advantages in terms of integration throughout their devices.
    schlackvukasikaStrangeDayssuperklotonfotoformatcalicornchipwatto_cobra
  • Reply 2 of 36
    having tried all the major services, Apple Music isn't necessarily the best, but if you're in the apple ecosystem, it's the most integrated, the most convenient, so I'm planning to return to Apple Music sometime this yr (been using Tidal and very happy with the high quality audio, but miss the integration with Siri and devices).
    superkloton
  • Reply 3 of 36
    previously i wasn’t in the market for paid streaming music. but since AM integrates with my existing music and playlists so seamlessly, i signed up on a shared family plan. very convenient, keeping it. discontinued my iTunes Match service, keeping the higher quality track replacements. 
    pscooter63watto_cobra
  • Reply 4 of 36
    calicali Posts: 3,495member
    This is the guy everyone was criticizing when hired by Apple. Do they not know how hard of a worker he is? Anyone who doesn’t should watch The Defiant Ones. 

    Jimmy isn’t satisfied because he sees Apple Music much bigger than it is now and he will take it there.

    Dr. Dre is also a ridiculously hard worker. He created 3 of the most iconic record labels in a row. I just don’t know what the hell he’s doing at Apple outside of his radio show. 
    cornchippscooter63
  • Reply 5 of 36
    SoliSoli Posts: 8,814member
    1) I guess I'm one of those now that I've finally signed up for my 3 free months.

    2) I wonder if this will become an antitrust issue.
  • Reply 6 of 36
    radarthekatradarthekat Posts: 3,050moderator
    at 30 million subs, I estimate it’s now at about a $3 billion annual revenue run rate.  Hey, wait...  isn’t that what Apple paid to acquire Beats?  Seems they got the hardware for free.
    calicornchipmdriftmeyer
  • Reply 7 of 36
    melgrossmelgross Posts: 31,663member
    I saw, quoted somewhere else, that Iovine said “many more” than 30 million. I don’t know what that means, Apple has no problem in using odd numbers such as “more than 27 million”. So I would imagine that it’s between 30 and 31 million. Still, that’s good growth, though he seems to feel that Apple needs a lot more.

    i wonder what the state of Apple Music is on Android? The reason why the iPod and iTunes became such a monster was because Edie Cue and Phil Schiller had that big argument with Jobs about pushing it to Windows, which Jobs thought was a bad idea. I remember that the biography related that he said to them when he finally agreed was that: “it’s on your heads”.

    good thing. But Windows users have more open minds about this kind of thing (most all iPhone and iPad owners are Windows users) than Android users do.
    watto_cobra
  • Reply 8 of 36
    radarthekatradarthekat Posts: 3,050moderator
    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    brucemctmaypscooter63watto_cobra
  • Reply 9 of 36
    melgrossmelgross Posts: 31,663member
    at 30 million subs, I estimate it’s now at about a $3 billion annual revenue run rate.  Hey, wait...  isn’t that what Apple paid to acquire Beats?  Seems they got the hardware for free.
    By far, the worlds best selling headphone business, and while it began before Apple acquired it, their headphone sound quality really has improved. Their profitability on their headphones is also in line with Apple’s net, which is around 20-21%.
    edited September 2017 radarthekat
  • Reply 10 of 36
    melgrossmelgross Posts: 31,663member

    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    I certainly agree with the assertion that streaming music isn’t profitable. This is something I’ve been saying for many years, since Apple was almost denounced, early on, for not going into it. Though, Jobs made a statement early in the 2000’s when asked if Apple would do it. He said that Apple’s customers wanted to own their music, but that if their customers demanded it, Apple would do it. And, well, here we are!

    while Spotify is now much bigger than they were, last quarterly report still had them losing money. Pandora loses a lot of money, which is why it went around trying to sell itself.  Tidal still has a very small customer base, and so sold a third of itself to Sprint.

    most all other streaming services over the years went out of business directly, or were bought, and were later closed down. My opinion on this is that in the end, only companies like Apple, Amazon, Google, maybe Microsoft, if they’re really interested, Facebook, and just a very few others, can pull this off. The problem is that with costs being what they are, $9.95 a month isn’t enough. Companies tried $14.95, but customers wouldn’t pay that much.
    radarthekatwatto_cobra
  • Reply 11 of 36
    brucemcbrucemc Posts: 1,527member
    melgross said:

    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    I certainly agree with the assertion that streaming music isn’t profitable. This is something I’ve been saying for many years, since Apple was almost denounced, early on, for not going into it. Though, Jobs made a statement early in the 2000’s when asked if Apple would do it. He said that Apple’s customers wanted to own their music, but that if their customers demanded it, Apple would do it. And, well, here we are!

    while Spotify is now much bigger than they were, last quarterly report still had them losing money. Pandora loses a lot of money, which is why it went around trying to sell itself.  Tidal still has a very small customer base, and so sold a third of itself to Sprint.

    most all other streaming services over the years went out of business directly, or were bought, and were later closed down. My opinion on this is that in the end, only companies like Apple, Amazon, Google, maybe Microsoft, if they’re really interested, Facebook, and just a very few others, can pull this off. The problem is that with costs being what they are, $9.95 a month isn’t enough. Companies tried $14.95, but customers wouldn’t pay that much.
    Any guesses then on who might buy Spotify?  My money would be on Google (vs. FB or Amazon), as it seems a better fit - adds to the number of services Goog offers to keep you in their world, alongside YouTube, maps, gmail, keeps Android subs happy, etc.  But in the end it is who is willing to pay the most bucks, and FB has shown willingness to go very high.

    My guess is that Apple is overall profitable in Apple Music on its own (though perhaps margins are very slim), given the Apple Music share of advertising and sales expenses (out of Apple's total pie) is likely low.  Outsiders will never know for certain of course.
    watto_cobra
  • Reply 12 of 36
    Apple probably makes 80% of the revenues of Spotify while having 50% of subscribers, so I know which company is in better shape.
    Not even talking profits.. Cause we know spotify has none.

    Spotify is running the dot com era build it and it will come model... Hoping to monetize their customer base OUTSIDE music.

    They're ASP considering financials is likely very low.
    edited September 2017 tmaywatto_cobra
  • Reply 13 of 36
    sog35 said:
    slurpy said:
    So, Apple wasn't even in the streaming music business a couple of years ago. Today, they already have 50% the amt of paid customers as the most popular streaming service in the world which has been out for MANY years longer. That's a massive win, and numbers will only increase from here. For anyone in the Apple ecosystem, Apple music delivers tremendous advantages in terms of integration throughout their devices.
    Personally I don't like Apple Music.  I had it for 1 year and it was not worth it.

    IMO, all music streaming sucks.

    Instead of paying $120 a year, I'd rather just buy 100 songs every year. And keep them FOREVER.  
    That's the same way I am. I prefer to own my own music. I actually still buy CD's. 
    ksecwatto_cobra
  • Reply 14 of 36
    melgrossmelgross Posts: 31,663member
    sog35 said:
    melgross said:

    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    I certainly agree with the assertion that streaming music isn’t profitable. This is something I’ve been saying for many years, since Apple was almost denounced, early on, for not going into it. Though, Jobs made a statement early in the 2000’s when asked if Apple would do it. He said that Apple’s customers wanted to own their music, but that if their customers demanded it, Apple would do it. And, well, here we are!

    while Spotify is now much bigger than they were, last quarterly report still had them losing money. Pandora loses a lot of money, which is why it went around trying to sell itself.  Tidal still has a very small customer base, and so sold a third of itself to Sprint.

    most all other streaming services over the years went out of business directly, or were bought, and were later closed down. My opinion on this is that in the end, only companies like Apple, Amazon, Google, maybe Microsoft, if they’re really interested, Facebook, and just a very few others, can pull this off. The problem is that with costs being what they are, $9.95 a month isn’t enough. Companies tried $14.95, but customers wouldn’t pay that much.
    $9.95 is enough to make profit.

    Problem is companies like Spotify/Pandora are spending a ridiculous amount of money on marketing/advertising.

    For example last year:

    Pandora:  $1.4 billion in revenue.  $500 million in gross profit. 

    That's a 36% Gross profit rate. That's almost as high as Apple as a whole!

    But the problem is Pandora spent $800 million in selling, admin, and R&D!!!!

    If they cut those overhead expenses, Pandora could easily be profitable.  But the problem is they are in mega growth mode, so they are spending like crazy to get new subs.
    It’s not enough to make a profit, and never has been. And marketing is a major thing for content. When a major movie comes out, marketing costs can easily exceed the costs of producing the movie. Most of the costs in producing popular music has always been in the marketing. Like it or not, that’s the way it is.

    gross is not profit. I know that sometimes it’s called profit, but it’s not. Profit is net, not gross, and not operating. Apple makes net profits of about 20-21%. That’s actual profit.
    radarthekat
  • Reply 15 of 36
    melgrossmelgross Posts: 31,663member

    brucemc said:
    melgross said:

    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    I certainly agree with the assertion that streaming music isn’t profitable. This is something I’ve been saying for many years, since Apple was almost denounced, early on, for not going into it. Though, Jobs made a statement early in the 2000’s when asked if Apple would do it. He said that Apple’s customers wanted to own their music, but that if their customers demanded it, Apple would do it. And, well, here we are!

    while Spotify is now much bigger than they were, last quarterly report still had them losing money. Pandora loses a lot of money, which is why it went around trying to sell itself.  Tidal still has a very small customer base, and so sold a third of itself to Sprint.

    most all other streaming services over the years went out of business directly, or were bought, and were later closed down. My opinion on this is that in the end, only companies like Apple, Amazon, Google, maybe Microsoft, if they’re really interested, Facebook, and just a very few others, can pull this off. The problem is that with costs being what they are, $9.95 a month isn’t enough. Companies tried $14.95, but customers wouldn’t pay that much.
    Any guesses then on who might buy Spotify?  My money would be on Google (vs. FB or Amazon), as it seems a better fit - adds to the number of services Goog offers to keep you in their world, alongside YouTube, maps, gmail, keeps Android subs happy, etc.  But in the end it is who is willing to pay the most bucks, and FB has shown willingness to go very high.

    My guess is that Apple is overall profitable in Apple Music on its own (though perhaps margins are very slim), given the Apple Music share of advertising and sales expenses (out of Apple's total pie) is likely low.  Outsiders will never know for certain of course.
    That’s an interesting question that I wonder about myself, as Spotify has also been getting huge amounts of money in investments to make up for their losses and to allow for expansion. Google has Google Music. I don’t know how well that’s doing. Amazon has their own music service. Facebook would look as though it could be a great match, if they’re interested. They do have a billion, or more, people on their service every day. I can see them playing music from the service too. Microsoft has music as well.

    i don’t know. It’s hard to say. If there is a service already, and it’s doing ok, a company may not be interested, if it’s growing, but if a company doesn’t, or theirs is stagnant, then I can see them going for it. Look at Samsung, for example. They really want to get away from Google. I mean, really. They have no ecosystem of their own though. So they duplicate Google’s apps on their own phones hoping people will use them instead. They have TouchWiz, hoping people will like it better. And several years ago, they had a music service called, of all things “Milk”. It failed, and they closed it down. But, if they’re still interested, they could buy one of these, and restart. It would be a beginning. Tizen hasn’t been a rousing success, just being on some of their watches, two cheap phones in India, and in their TVs, which isn’t quite the same thing.

    so, maybe they would be interested, if they still don’t feel too burned by their first experience. But whatever happens, it’s got to be a company that’s making really big sales and profits, for which this is a gateway to their other products.
    radarthekatwatto_cobra
  • Reply 16 of 36
    lkrupplkrupp Posts: 7,072member
    schlack said:
    having tried all the major services, Apple Music isn't necessarily the best, but if you're in the apple ecosystem, it's the most integrated, the most convenient, so I'm planning to return to Apple Music sometime this yr (been using Tidal and very happy with the high quality audio, but miss the integration with Siri and devices).
    You forgot to add “in my personal opinion”. There, I fixed it for you.
    watto_cobra
  • Reply 17 of 36
    lkrupplkrupp Posts: 7,072member
    Most here would agree, would we not, that even though Android has vastly more “subscribers” than iOS in the world it is not better than iOS because of the numbers. In fact many of us would say that iOS is better and that shear numbers don’t tell the true story. In my mind the same argument applies to Spotify vs Music. Spotify may have more subscribers partly because it’s been around longer. So when someone says Spotify is better than Music and states it as a matter of objective fact they should be called out. I’ve tried both Spotify, Pandora, and Amazon Music and IN MY PERSONAL OPINION all are good but not better than Music. For me personally Music is my choice precisely because of its integration with the Apple ecosystem. And now with the $99/yr option it’s a no brainer for me.
  • Reply 18 of 36
    melgrossmelgross Posts: 31,663member
    sog35 said:
    melgross said:
    sog35 said:
    melgross said:

    It finally occurred to me, after all the years I’ve been in the market, the proper phrasing for how to think about the GPROs, FITs, ROKUs, Ps and Spotify’s, and FBs of the world.  And that’s this... “if you’re going to be a lot bigger in the future, you kinda have to be THE future, of something big.”  Not part of the future, not along for the ride.  You really have to be the driver of the future of something significant.  FB was, back at $19/share, the future of social media.  (Yeah, I missed that one.)

    But GPRO was not the future of how people use cameras.  At best it was, and remains, a niche.  The smartphone is the future of how people use cameras; evolving optics strapped to a huge screen (you take pics and video to look at them) and a very capable processor with built-in AI to get the most out of the images.  That’s an iPhone.

    FIT is not the future of wearables.  It’s a smartwatch connected to a huge ecosystem, home control systems, music streaming, hime/car/office/hotel room access, notifications, fitness, health monitoring and recording and reporting, etc.   That’s Apple Watch.

    P is not the future of streaming music, maybe for no reason greater than it’s a business trying to profit on streaming music.  Streaming music’s future might simply not be profitable on its own; there may simply not be a profitable business model to be built around it (note: profitable is different than ‘paid’).  Apple Music, of course, isn’t reliant upon being profitable.  It can branch out in myriad unprofitable directions to enrich the user experience and bring more content that can a business that has to show a profit.  Think subsidizing budding artists in return for a period of exclusivity.  Think Carpool Karaoke and other exclusive and free content additions.

    Roku is not the future of streaming video.  It’s just one player among many that has not specific advantage in the long evolution and eventual shake out and consolidation.  No more than RIMM [Blackberry] was the future of smartphones.  In the end, the biggest players with the deepest pockets will own this market.  See... Apple TV, et al. 

    “You have to be THE future.”
    I certainly agree with the assertion that streaming music isn’t profitable. This is something I’ve been saying for many years, since Apple was almost denounced, early on, for not going into it. Though, Jobs made a statement early in the 2000’s when asked if Apple would do it. He said that Apple’s customers wanted to own their music, but that if their customers demanded it, Apple would do it. And, well, here we are!

    while Spotify is now much bigger than they were, last quarterly report still had them losing money. Pandora loses a lot of money, which is why it went around trying to sell itself.  Tidal still has a very small customer base, and so sold a third of itself to Sprint.

    most all other streaming services over the years went out of business directly, or were bought, and were later closed down. My opinion on this is that in the end, only companies like Apple, Amazon, Google, maybe Microsoft, if they’re really interested, Facebook, and just a very few others, can pull this off. The problem is that with costs being what they are, $9.95 a month isn’t enough. Companies tried $14.95, but customers wouldn’t pay that much.
    $9.95 is enough to make profit.

    Problem is companies like Spotify/Pandora are spending a ridiculous amount of money on marketing/advertising.

    For example last year:

    Pandora:  $1.4 billion in revenue.  $500 million in gross profit. 

    That's a 36% Gross profit rate. That's almost as high as Apple as a whole!

    But the problem is Pandora spent $800 million in selling, admin, and R&D!!!!

    If they cut those overhead expenses, Pandora could easily be profitable.  But the problem is they are in mega growth mode, so they are spending like crazy to get new subs.
    It’s not enough to make a profit, and never has been. And marketing is a major thing for content. When a major movie comes out, marketing costs can easily exceed the costs of producing the movie. Most of the costs in producing popular music has always been in the marketing. Like it or not, that’s the way it is.

    gross is not profit. I know that sometimes it’s called profit, but it’s not. Profit is net, not gross, and not operating. Apple makes net profits of about 20-21%. That’s actual profit.
    What does movie marketing have to do with Pandora? Nothing. Two totally different types of businesses.  Pandora isn't making movies or selling music albums. They are a streaming service and they don't need nearly as much marketing expense to stablize sales. The Movie/Album business is a hits business. So they do need massive advertising/marketing everytime they release a new movie/song.

    My point is if Pandora stopped running massive marketing campaigns to add customers, they could easily make a profit.

    35% gross profit is massive. Note that Apple's gross profit is about 38%
    It has everything to do with it. If they dropped their marketing to levels that would make you happy, they would lose customers.

    just stop talking about gross “profits”. First of all it’s not “massive” and secondly, it’s not profit. Again, only “net” is profit. Read the link below. You’ll notice that their revenue from subscriptions is minuscule, and most all of it comes from advertising. Then you’ll also notice that their net=profit or loss, is a big loss, again. No profits there. Gross is not profit, only net.

    http://investor.pandora.com/file/Index?KeyFile=389688848
    edited September 2017 radarthekat
  • Reply 19 of 36
    brucemcbrucemc Posts: 1,527member
    Every service has "churn" (people leave for any number of reasons), and if you are not signing up new customers faster, your subscriber base drops.  If sales and advertising budget are cut, then it affects the latter.  It is not a hard concept.

    The term "gross profit" is misapplied - perhaps what is meant is "gross margin" (revenue of goods sold - cost of goods to produce).
    tmayradarthekatwatto_cobra
  • Reply 20 of 36
    ksecksec Posts: 1,559member
    1. I dont know how that 3 Billion yearly revenue for Apple Music was calculated, 30 Million paying subs, with family member plans, student plans, countries which charges less then $10 per month. Minus Music Label company collection, Apple dont make much, if any money out of it Apple Music.  So no, one make it sound like Apple instantly make all the money back they bought for Beats from Apple Music. Although i must say the headphones are doing well for Back to School Promotion.

    2. They are may be millions of hard working people. So Iovine working hard does not mean he is working good. And I bet he doesn't work any longer hours then Marissa Meyers. The point is, like Steve Jobs have said, "Somewhere between the janitor and the CEO, reasons stop mattering," that Rubicon is "crossed when you become a VP." If you live in US ( And possibly UK or some part of Europe ), great. Apple Music has a fairly decent music collection, so despite its utter failure in Application UX Design, it is doing fine against Sportify. Elsewhere around the world, Apple Music is utter crap.

    3. It is good though I think Iovine has learned, or may be he has been pressured from others, not to go on about the Next Song.

    4. Iovine taste on speakers is more bass and more Bass, which he said the unimproved, first version of Beats were great and Apple's Earpod were crap. Holy smoke. Interestingly somewhere along the line Beats start to produce slightly more "balanced" sounding headphones that were only slightly better then original, and since Apple bought them they have improved a lot. I was worry this madness and disease of Bass taste will spread into Apple, luckily it did not. 

    5. Iovine has also stopped mumbling on about Music Discovery, because the Data has shown, apart from those ~10% Music fans who love new way to find out new music, majority of users dont sign up a subscription to discover new music. The Apple Music UI design has reflected on this changes as well to be less about what Iovine's dream of everyone searching for new music. It was may be a noble goal, but either people dont want it or his implementation of the idea does not work.

    6. I still strongly believe, Music Subscription wont last. Buying Music will come back, as I have recently learned, Subscription Music sometimes means they could take away my Songs whenever the two company dont have a deal. Or we make a better way to fuse the two together or fix this problem.

    7. Apple Music will need to improve a lot. It is not all Iovine 's fault. Apple Map in Japan is totally unusable. And Japan used to be Apple's biggest International market before China grew so large. Given Apple's half hearted attempt in market other then English Speaking counties, there are things they simply dont get it.

     

    radarthekat
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