Apple Music has bested Spotify in the amount of paid US subscribers, according to The Wall Street Journal. Apple Music counted an estimated 28 million paid subscriptions in February 2019. Spotify, on the other hand, has just over 26 million subscribers. The growth of Apple is also faster than that of predecessor Spotify. Apple is adding US subscribers at a monthly growth rate of 2.6% to 3%, compared with 1.5% to 2% growth for Spotify.
Due to their free version, Spotify will likely be able to top Apple Music in overall users (both in the US and worldwide). Spotify already has far more international subscribers and active users worldwide than Apple Music. This is probably caused by Spotify's free, ad-supported tier. In the last quarter of 2018, Spotify reported 207 million active users worldwide, 96 million of which are paid subscriptions.
Meanwhile, Apple Music, which doesn't offer an ad-supported option, only has about 50 million subscribers worldwide. Spotify's free tier is likely key to converting users abroad. It provides an indefinite and low-risk way for users to test the app's interface and features before financially committing. Apple's chief advantage is its addressable base of iPhone users for whom the Apple Music app is pre-installed. Apple estimates there to be 101 million active iPhones in the US and nearly one billion worldwide. Apple may not offer a free version but they do offer a free three-month trial. The app is pre-installed on iPhones, which reduces friction and encourages sign-ups. Apple may also stand to lure more subscribers to its service through features like lyric-based song search and exclusive content launches.
Apple has been focused on increasing its services revenue as iPhone sales are not as promising as they once were. iPhone sales were 15% lower in 2018 than in 2017, while Services revenue (including Apple Music) increased by 87% to $37.2 billion in the same year.
Apple could bundle together some of its services like Apple Music, Apple News+, Apple TV+ and Apple Arcade to boost its recurring revenue and drive sales. Given Apple's approach with other services — which are largely subscription-based — it is unlikely that Apple will create an ad-supported option for its Music app. A services bundle, on the other hand, seems logical.
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