Apple Music has surpassed Spotify Technology in paid U.S. subscriptions, in a shift that escalates the music rivals’ contest for listeners world-wide. Apple Inc.’s streaming-music service has been adding subscribers in the world’s biggest music market more rapidly than Spotify, at a monthly growth rate of about 2.6% to 3%, compared with 1.5% to 2% for Spotify.
As of February 2019, Apple Music had more than 28 million subscribers in the U.S. and Spotify had 26 million. Spotify remains far ahead of Apple globally. As of December, Spotify said it had 207 million active users around the world, 96 million are paying subscribers or in a trial period leading to a subscription. Apple, which doesn’t offer a free, ad-supported option, has more than 50 million paying subscribers.
Apple was expected to reach its milestone more than six months ago, but Spotify intensified efforts to maintain its lead, by coming up with various promotions including a discounted subscription bundle with Hulu, a video streaming service. More recently, the Spotify filed an antitrust complaint in Europe claiming Apple abuses its control over the App Store to advantage the iPhone maker’s service, but Apple denies it.
As streaming has become the most popular way people listen to music, subscriptions have become the most closely watched metric for the services competing to grow market share. Apple Music is growing faster globally at a rate of about 2.4% to 2.8%. On the other hand, Spotify is growing at a rate of 2% to 2.3%.
Apple has used its devices’ popularity to attract music-streaming users because the Apple Music app comes preloaded on iPhones and other Apple hardware. According to Strategy Analytics, a market research firm. Apple has a base of about 101 million active iPhones in the U.S. The Apple Music app is also available on Android devices and has been installed about 40 million times world-wide from the Google Play store. Despite its growth, Apple’s Apple Music business is not expected to lift company profits. According to RBC Capital Markets, costs associated with paying labels, publishers and artists means the service has a gross margin of roughly 15%, the lowest of any of Apple’s services.
To get more subscription, Apple joined with Verizon Communications Inc. to provide six months of Apple Music free to new and current customers. Apple has used its marketing muscle to accelerate subscriptions, spending twice as much as Spotify on TV ads in the U.S. since 2016.
The streaming-music service is trying to counter Apple’s distribution advantage of 1.4 billion active devices through an agreement struck in August with Samsung Electronics Co. , making Spotify the default music service across the South Korean company’s phones, TVs and speakers.
I chose this article because I am a subscriber to Apple Music instead of Spotify. I have tried Spotify but I did not like it. Although Spotify has a good promotion going on with Hulu, I still refuse to subscribe to it.
This article relates to marketing because these two major music streaming services have been in competition for a long time now. Both Apple and Spotify use the same type of promotion services but differently for promoting discounts and partnerships, like Apple Music with Verizon and Spotify with Hulu. The different subscription plans and discounts relate to the pricing aspect. The different prices attract certain customers.
April 5, 2019 10:52 a.m. ET
Spotify needs to step up their game!
ReplyDeleteI liked this article because illustrates the hold that Apple has across multiple digital platforms, including music. For Spotify, they need to change their approach, whether it be in their marketing plan or reassessing their SWOT, to make sure that they stay on top in the music streaming industry.
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