Earning a third as many paid users as Spotify in under 4 months, Apple Music already a hit, FBR says

Posted:
in AAPL Investors edited October 2015
Less than four months after it launched, Apple Music already has 6.5 million paid subscribers, or nearly a third of the 20 million who pay for Spotify, a service that has been around since 2008, investment firm FBR & Co. said on Tuesday.




Analyst Daniel Ives issued a note to investors, a copy of which was provided to AppleInsider, in which he declared Apple Music off to a "solid start." The 6.5 million subscribers already roped in by Apple exceeded his own expectations -- Ives had forecast for Apple to have 5 million paid customers by the end of October.

"We would characterize this initial stage of the launch as a 'triple' in the streaming ballgame," the analyst wrote.
FBR analyst Daniel Ives believes Apple Music will help lay the groundwork for an Apple streaming television service in 2016.
In an interview on Monday, Apple Chief Executive Tim Cook revealed that Apple Music has 15 million total users, with the remaining 8.5 million customers still in a three-month free trial period. The CEO characterized the service as "going pretty well" since its June 30 debut.

In comparison, after 7 years on the market, leading streaming subscription service Spotify has earned a total of 75 million customers -- 55 million free and 20 million paid. One key difference: The Apple Music free service is a limited three-month window, while Spotify is available ad-supported indefinitely.

To Ives, Apple Music is just the first step before the Cupertino, Calif., company jumps into the streaming television business in 2016. He believes that in the interim, Apple will "spread the gospel" and add unique content and services to its streaming portfolio.

Like Spotify, Apple Music is priced at $9.99 per month for a single user's subscription, or $14.99 a month for a Family Membership shared by up to six people. Rather than paying for individual songs for albums, users can stream or download any track from Apple's massive library of digital music, as long as they remain a paid subscriber.

One key differentiator for Apple is human curation and expert music recommendations that are exclusive to Apple Music. The service is also tightly integrated into the company's ecosystem, though it will also become available on Android devices this fall.
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Comments

  • Reply 1 of 61
    thrangthrang Posts: 899member
    I dropped the family plan two days ago, I wonder which side of the wild estimate I'm in???
  • Reply 2 of 61
    Spotify said "over twenty million" in June. Sorry, I need up to date numbers from them before I agree that it's a third as many.

    And as a percentage of active iOS devices that's a really low number...
  • Reply 3 of 61
    lkrupplkrupp Posts: 9,560member

    Haters gonna hate. Loud mouth critics of Apple Music presume to speak for the majority. Apple Music is succeeding and will only get bigger. Deal with it.

     

    And we haven’t even got the Android app out yet. Things can only get better. Spotify depends on its paid subscribers for profit. The freeloaders just keep the lights on. Once Apple Music starts chipping away at the paid subscribers the end could come quickly.

  • Reply 4 of 61
    I like Spotify more so I dumped the Apple Music after the trial.
  • Reply 5 of 61
    Apple needs to block off 3 mins of advertising space during a high profile event and basically treat the advertsisment as a 'how-to' for setting up and signing up for Apple Music. I think the biggest issue is people who think new features only come when you upgrade the device. (aka Android converts).
  • Reply 6 of 61

    I like Apple Music more so I dumped the Spotify after the trial.

  • Reply 7 of 61
    richlrichl Posts: 2,213member

    I've got both Spotify and Apple Music at the moment as I get Spotify for free through my carrier. I've also been pretty lazy when it comes to porting my Spotify playlists over to Apple Music.

     

    The big question for me is whether I want my purchased music mingled in with my subscription music. Ironically, the thing that may keep me sticking with Spotify is that it's not integrated with the Apple ecosystem.

  • Reply 8 of 61
    Quote:

    Originally Posted by aircm1982 View Post



    I like Spotify more so I dumped the Apple Music after the trial.

    I may give Spotify a try but I suspect I'll end up not liking it enough to keep it; streaming isn't hugely my thing. At my apartment I keep an iMac G4 loaded with my library as a jukebox, so I may not fit the bill of "typical customer of today".

     

    Quote:

    Originally Posted by michaeloftroy View Post



    Apple needs to block off 3 mins of advertising space during a high profile event and basically treat the advertsisment as a 'how-to' for setting up and signing up for Apple Music. I think the biggest issue is people who think new features only come when you upgrade the device. (aka Android converts).



    From the company that brought you "there's no step three" and "it just works" comes a three minute infomercial explaining our music service; which is so complex it needs a Twitter support account just for it.

  • Reply 9 of 61
    Quote:

    Originally Posted by RichL View Post

     

    I've got both Spotify and Apple Music at the moment as I get Spotify for free through my carrier. I've also been pretty lazy when it comes to porting my Spotify playlists over to Apple Music.

     

    The big question for me is whether I want my purchased music mingled in with my subscription music. Ironically, the thing that may keep me sticking with Spotify is that it's not integrated with the Apple ecosystem.




    That's a big thing for me, actually. As I've said, it just felt like I was polluting my music library. I also didn't like all the changes that iCloud Music Library made; I was fine with the album art I had. No sane person wants the creepy second version of the Songs of Innocence cover...

  • Reply 10 of 61
    And as a percentage of active iOS devices that's a really low number...

    And that means anything, why? Being an iOS user doesn't mean your interested in subscription music, so the fact that Apple hasn't penetrated their entire installed base has no bearing on this discussion.

    Using your logic look at it this way; as a percentage of active devices Spotify can run on that's an even lower number. Spotify must be failing!
  • Reply 11 of 61
    Quote:

    Originally Posted by 50miles View Post





    And that means anything, why? Being an iOS user doesn't mean your interested in subscription music, so the fact that Apple hasn't penetrated their entire installed base has no bearing on this discussion.



    Using your logic look at it this way; as a percentage of active devices Spotify can run on that's an even lower number. Spotify must be failing!



    Spotify isn't integrated into every phone.

  • Reply 12 of 61
    Quote:

    Originally Posted by TheWhiteFalcon View Post



    Spotify said "over twenty million" in June. Sorry, I need up to date numbers from them before I agree that it's a third as many.



    And as a percentage of active iOS devices that's a really low number...

     

    You don't need any numbers, because you'll believe what you want to and spin it to make Apple Music look bad regardless.

     

    You know why Spotify hasn't posted updated numbers? Because they probably LOST subscribers. Spotify is just like Samsung and their Galaxy S and Note sales. When they were going up they were happy to report numbers. As soon as they faltered they stopped. Spotify has done the same thing. I doubt we'll be hearing anymore numbers from Spotify on their subscriber base.

     

    All you have to do is look at their behavior this year. Whining about Apple charging 30%, sending out that pathetic e-mail to customers to get them to sign up online instead of through an in-App purchase, tattling like the little bitches they are to try and get the FTC to investigate and so on. This is a company that's scared to death of Apple Music, and rightfully so.

     

    Spotify's business model is unsustainable. They're going to have to do something quick to stay alive.

  • Reply 13 of 61
    Quote:

    Originally Posted by EricTheHalfBee View Post

     

    Spotify's business model is unsustainable. They're going to have to do something quick to stay alive.


    From the numbers today, Apple Music isn't sustainable either; it's just that Apple can bury that in the P&L and pretend all is well.

     

    The same way Microsoft was able to use IE to crush Netscape and others; they didn't have to make money on it so why bother?

  • Reply 14 of 61
    lkrupplkrupp Posts: 9,560member
    Quote:

    Originally Posted by TheWhiteFalcon View Post



    Spotify said "over twenty million" in June. Sorry, I need up to date numbers from them before I agree that it's a third as many.



    And as a percentage of active iOS devices that's a really low number...



    Actually that Spotify subscriptions number has more than likely dropped, not increased as you so fervently hope. A good percentage of those 6.5 million paying Apple Music subscribers probably switched from Spotify. And then there’s the Android support that’s coming. That will change the equation even more in Apple’s favor. After three months Apple Music is well on its way to success.

  • Reply 15 of 61
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    From the numbers today, Apple Music isn't sustainable either; it's just that Apple can bury that in the P&L and pretend all is well.

     

    The same way Microsoft was able to use IE to crush Netscape and others; they didn't have to make money on it so why bother?


     

    Uh, Apple Music doesn't have a money-losing ad-supported subscription model like Spotify (which makes up MOST of their users). Apple will make money on every single Apple Music subscriber, since, you know, users actually PAY for their service.

  • Reply 16 of 61
    Quote:

    Originally Posted by sog35 View Post

     

     

    oh the hate.

    oh the hate.

    LOL.

     

    Are you a Spotify shareholder or something?

     

    AppleMusic and iTunes falls under the same umbrella.  Of course its a sustainable business.


     

    This should be a question on those IQ tests.

     

    As GatorGuy is to Google, TheWhiteFalcon is to:

     

    a) Spotify

    b) Apple

    c) Pandora

    d) Microsoft

  • Reply 17 of 61
    Quote:

    Originally Posted by EricTheHalfBee View Post

     

     

    Uh, Apple Music doesn't have a money-losing ad-supported subscription model like Spotify (which makes up MOST of their users). Apple will make money on every single Apple Music subscriber, since, you know, users actually PAY for their service.


    The estimate thrown out was one billion in revenue. Over 70% of that was paid out to labels. Then factor in the startup costs, advertising costs, the costs of running support for the service, Beats 1 costs, etc, there's no way they didn't spend more than 1 billion already. So they're in the red for now.

  • Reply 18 of 61
    I'm a paid subscriber, because I forgot to cancel my trial and I didn't get an email warning me that I'll be charged soon. I wonder how many others are the same.
  • Reply 19 of 61
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    The estimate thrown out was one billion in revenue. Over 70% of that was paid out to labels. Then factor in the startup costs, advertising costs, the costs of running support for the service, Beats 1 costs, etc, there's no way they didn't spend more than 1 billion already. So they're in the red for now.


     

    When you lack actual numbers, you can always pull some out of your ass to try and support your argument.

     

    I see you want to avoid Spotify having most of their subscribers on a money-losing free tier. Even at 20 million they're still losing money.

  • Reply 20 of 61
    Quote:

    Originally Posted by EricTheHalfBee View Post

     

     

    When you lack actual numbers, you can always pull some out of your ass to try and support your argument.

     

    I see you want to avoid Spotify having most of their subscribers on a money-losing free tier. Even at 20 million they're still losing money.




    I didn't say they weren't. I said Apple can afford to subsidize a money losing operation because they'll bury it in the P&L. I made an apt comparison to Microsoft using IE to destroy Netscape. Anything else you're reading into it is from your imagination.

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