Apple Sings about Its 6.5 Million Paid Music Subscribers
Tech giant Apple says it has big news. Its streaming music service has attracted over 6.5 million paid users since it rolled out in June. However, the company lost 11 million users after the first free trial period ended.
Apple Music is an app that offers live streaming music 24 hours a day. Apple claims it has the largest and most diverse music catalogue in the world. That may be disputed but what Apple can boast is music experts who have programmed playlists.
The company launched the service with a three-month free membership. The cost to subscribe to the service is $9.99 a month, which is competitive with streaming services like Pandora and Spotify. The family plan lets six people subscribe for $14.99.
"I'm really happy about it, and I think the runway here is really good," Apple CEO Tim Cook said yesterday at WSJDLive, The Wall Street Journal’s global technology conference.
Can Apple Pull Away?
Beyond the 6.5 million paid subscribers, Cook revealed that another 8.5 million are in the free trial period. All told, that’s a reach of 15 million users. The deal ended for the first wave of free trial users at the end of September.
"I'm finding personally that I'm discovering a whole lot of music that I wasn't listening to before," Cook said. "I think it's fabulous . . . We have music experts, just like the DJ when we were growing up . . . that are deciding what's next. It brings the art back in music."
For all the celebrating, though, the bottom line numbers reveal that Apple lost about 40 percent of its subscribers after the first free trial period. In other words, 11 million people liked Apple Music enough to use it for free but most of them did not like it enough to pay for it month after month.
Apple’s stated goal is to win 100 million paid users to the app, but it will have to win them away from entrenched competitors in the subscription music space. Still, with a strong iTunes foundation and the acquisition of Beats Music and Beats Electronics for $3 billion in May, Apple is a force to be reckoned with in the digital music industry.
Beats hit the market five years ago and has become a massive cultural hit. With the cache of its iconic co-founders, Dr. Dre and Jimmy Iovine, Beats has attracted the likes of Lady Gaga, Lil Wayne and Nicki Minaj to design their own customized Beats headphones and speakers.
And Beats Music was developed by a team of people who have spent their careers in music, resulting in curated content that athletes like basketball superstar LeBron James, tennis giant Serena Williams and Brazilian soccer wunderkind Neymar say is a critical part of their training and game-day processes.
Good Out of the Gate
We caught up with Greg Sterling, vice president of strategy & insight at the Local Search Association, to get his thoughts on Cook’s announcement. He told us you can choose to see the glass as half empty or half full.
“This is a relatively good start for Apple music. It's very challenging to convert users into paid subscribers,” Sterling said. “We'll have a much better sense nine months to a year from now of whether the service is a success.”
Sterling does not have access to comparable growth figures for competing services to determine if Apple Music is off to a really strong start.