Apple Music could soon dethrone Spotify as the largest music streaming platform in the US. According to a new report, Apple’s music streaming platform is growing faster than Spotify in terms of subscriber base later this year.
In the US, Apple Music is growing at about 5 percent a month while Spotify is growing at around 2 percent. The Wall Street Journal reports that Apple will outpace Spotify in the world’s biggest music market this summer citing people in the record business. Spotify is the undisputed market leader in the music streaming space with around 70 million paid subscribers and over 100 million subscribers overall.
In comparison, Apple confirmed to have 36 million paid subscribers on its platform, which makes Spotify twice as big as that of Apple Music. The details from WSJ comes just as Spotify prepares to go public with a private listing on the New York Stock Exchange this year.
Apple Music was introduced in June 2015 and it has been gaining popularity primarily because of it being bundled as default music player on company’s iPhone. However, Spotify continues to grow in the global market and it remains in a league of its own. The other major contenders in the paid music streaming space include Pandora, Amazon Prime Music and Google Play Music.
Paid music streaming is becoming one of the main stream of revenue for record labels which has been seeing decline in sales of CDs and music downloads for few years now. On streaming music platforms, consumers pay a flat fee in exchange for ad-free unlimited music or listen to music with pre-roll ads. The platforms give access to a wide array of music catalog across multiple genres, making the deal lucrative for most subscribers.
WSJ reports that paid subscriptions were up 61 percent and is the largest source of record-company revenue in the US during the first half of 2017. While the music streaming revenue continues to grow, the overall business has been questioned by analysts for lacking a viable model. These companies have also engaged in constant fight with music labels on issues like revenue sharing with Taylor Swift pulling out her entire music catalog over lower revenue.
It remains to be seen what kind of metrics Spotify will share once it becomes a publicly traded company. It has also not revealed which countries it plans to enter this year to expand its base.
Unlike Spotify, Apple does not offer free tier on its platform and some industry experts say that users tend to switch to paid subscription at the end of three month free trial. Apple Music is part of company’s Services revenue, which has been growing at a phenomenal pace for the past few years. In the first quarter earnings for fiscal 2018, Apple announced that services revenue grew to nearly $8.5 billion, a 17 percent change over same period last year.
Apple also has a huge stack of cash in order to bargain a better deal with music labels and its single major advantage being its availability in 115 countries while Spotify is available in only 61 countries. Spotify and Apple Music are heading towards a two-way battle in the music streaming business and it needs to be seen whether Spotify comes up with new offering to slow down Apple Music’s growth.