Beats on iPhone

Apple Music Subscriber Numbers in Context

Last Thursday, Apple announced it had signed up 11 million customers for Apple Music. For now, obviously, those customers are all in their three month trial periods, so that’s not the same as signing up 11 million paying customers for a music streaming service. But it’s worth looking at that number, both on the context of music streaming services in general and of Apple’s overall base of customers.

The context of other streaming services

First off, let’s put it in relation to other streaming services. Spotify is the one always mentioned and it certainly has the largest number of paid subscribers of any online music streaming service. But it’s worth looking at the overall landscape for these services across both paid and free options. The chart below shows the latest figures available for various services, including Apple Music and iTunes Radio, but also Pandora, SiriusXM, and several other streaming music services:

Music services

I’m including SiriusXM because it’s actually the most popular paid music/radio subscription service in the world, with over 23 million subscribers (to Spotify’s 20 million) and its “Mostly Music” option is priced (at $10.99) quite similarly to some of the other paid streaming options. I’m also including Pandora, which continues to be (barely) the most popular overall option, with just shy of 80 million, though it’s likely Spotify will pass it soon.

Where then does Apple Music sit in all this? With 11 million subscribers, it’s in sixth place behind Pandora, Spotify, iTunes Radio, SiriusXM, and Deezer, and ahead of only Rhapsody among these major services. However, were Apple to convert a little over half of those 11 million trial subscribers into paying users, it would be in third place for paid subscriptions behind just SiriusXM and Spotify and second among streaming music services. For a service launched just over a month ago, that’s incredibly impressive.

The context of Apple’s base

However, Apple Music isn’t just another startup providing a streaming service – it comes from Apple, which has a base of a little shy of 500 million iPhone users as well as many other users of iTunes, iPads, iPods, and other devices. Let’s focus just on the 500 million iPhone users: 11 million is only about 2% of those, which makes for a tiny conversion rate. It’s also worth noting 11 million happens to be the exact number of iTunes Radio users Apple announced a single week after iOS 7 – another OS update that included a new streaming music service from Apple – launched. Apple Music, then, is significantly underperforming iTunes Radio at this early stage.

Evaluating Apple Music’s performance

How should we view this early performance of Apple Music? And why is that 11 million number not much higher? In the context of other music services, Apple Music has made a great start, especially if it can convert a significant portion of those trial subscribers into paying subscribers come September and October. But, in the context of Apple’s overall base, it’s made a pretty slow start. There are several possible explanations for this. So let’s examine them one by one:

  • Slow iOS 8.4 adoption. iOS 8.4 – a requirement to use Apple Music on an iOS device – hasn’t been installed and, therefore, people don’t have access to Apple Music. We can eliminate this one pretty quickly – Mixpanel estimates that, among the base of devices it tracks, some 58% had installed iOS 8.4 by August 7 and that number was already over 40% after the first ten days or so. Clearly, the issue isn’t that no one has installed iOS 8.4. Yes, there are certainly many users who haven’t, but over 200 million have and that’s a pretty big base to be working with.
  • Lack of awareness. Perhaps even those who installed iOS 8.4, likely prompted by the red circle with a number in it on their Settings icon, just upgraded out of habit without knowing they were getting Apple Music in the process. This is certainly possible, although anyone who actually opened the Music app would have become aware of it. There likely is a subset of iOS users – maybe fairly large – who no longer use the Music app, but this surely doesn’t explain most of the holdouts. I think it would be smart for Apple to bake a screen about Apple Music into the iOS 9 upgrade process to raise awareness among this group, however.
  • Lack of interest. One of Apple’s key objectives with Apple Music has been not just to convert users from other streaming music services like Spotify, but to create new streaming music subscribers. But what if most of the people not yet using streaming music services simply aren’t interested in them? In other words, the very concept of Apple Music has very little appeal to them? There’s clearly going to be a significant proportion of the Apple base that falls into this category.
  • An off-putting sign up process. One might argue that iTunes Radio enjoyed more rapid adoption than Apple Music because it was free but, at this point, Apple Music is too, because everyone gets a three month trial. So what are the differences between the two? For one, iTunes Radio just worked – there was no sign up process and no changes to how the Music app functioned (except for a new tab). With Apple Music however, there was a whole series of screens users had to work their way through, many of them emphasizing the payment and subscription elements. The final button users had to push – three months before they’d actually have to pay anything – was not “start my free trial” but “Buy”. I completely understand why Apple did it this way – in principle, you are signing up for a subscription that will automatically start in three months from when you push the button. But it must have been an off-putting process for many people who just wanted to try out Apple Music. I think along with making the app easier to use, Apple needs to simplify this onboarding process and make it much less intimidating than it is today.

It’s impossible to know which of these factors are really significant in the fact Apple has only signed up around 2% of potential subscribers at this point. I suspect they all play a role. Apple also hasn’t begun promoting the service heavily, though billboards did go up in some big cities this past week. Perhaps there will be a big push around iOS 9 and the new iPhones due in September, though there will be much else to talk about then, too. And perhaps Apple Music subscribership will just grow much more slowly than its other services to peak adoption. As I wrote previously, Apple likely isn’t in this for the money and, at $10 per month, even 11 million subscribers would barely make a dent in Apple’s Services segment revenues, let alone its overall revenues. So it can likely afford to wait out a slow ramp up to a more competitive market share in streaming music.

Published by

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

7 thoughts on “Apple Music Subscriber Numbers in Context”

  1. I’d add a few reasons:
    – technical issues: the blogosphere is rife with audiophiles reporting issues, from mundane bugs to losing whole swathes of music/playlists. That’s doubly bad because audio nerds are probably opinion leaders.
    – saturated market: I’m guessing most people OK with paying for music streaming have already signed up with one of the competitors, and there are some network effects too (playlist sharing, social…). Apple needs to either awaken new demand, or convince existing payers to switch. The 3-month free period is mostly an acknowledgement of that I think, trying to get people to build a habit ? I’m wondering if Apple Music won’t even help Spotify.
    – lock-in: Apple Music is pretty much the only music service that’s platform-specific. Anyone with an Android phone/tablet is fully excluded for now, and even on a Windows PC you’ve got to go through iTunes, which has a lot of issues. And moving forward, you’ve got to be pretty sure you not only are, but also will stay, an Apple-only household. That’s a big commitment to make.

  2. Ecosystem culture? For myself, I’ve yet to find a streaming service that interests me as much as the music I have already purchased. How many iPhone user have the same perspective? I don’t know. Or maybe those who are interested in streaming are already invested in the other services. Pandora an Spotify have had quite the run and seem pretty well entrenched, especially with the younger crowd. They’ve already figured out quite a bit with both services. Apple Music means they are starting from scratch figuring out the nuances.

    Joe

    1. My kids have already ditched Pandora, Spotify, SoundCloud, YouTube, et al for Apple Music. I’m not using Apple Music a lot yet so I can’t really comment, but they tell me the discovery part of Apple Music is what delights them. Oh, and they dig the Beats 1 station.

  3. I signed up for Apple Music and got horribly burned when I switched on ‘Enable iCloud Music Library’.

    Like some others, I witnessed playlist duplications, and physical assaults on some of my album artwork.

    Put simply, I have to do without the ability to save music for offline listening. This is not a deal-breaker, but it’s a disappointment that this feature does not (to quote Apple) ‘just work’.

    In fact, it ‘just sucks’.

    But leaving that aside, I *do* think that Apple Music is a strong value proposition, in that everything else about it works very well (Beats 1 is in my opinion, quite fantastic).

    I will continue the subscription when the free trial period is up. I will use the streaming service, but will wait until Apple have sorted out the iCloud Library before dipping my toe into *that* particular piranha tank again…

    1. I had the same problem. I fixed the issues on my Mac. It took a bit of time but my artwork is back and duplicates deleted. Then I turned in iCloud music on my iPhone to have the same problems again. It’s now off and my music restored via iTunes sync. I won’t turn it back on until the problems are corrected.

      Having Apple Music only work as streaming is probably a deal breaker for me. I probably won’t pay after the free trial is over.

      1. That’s an interesting point about streaming only being a deal breaker. I wonder if that’s a generational split? My kids (all teenagers) don’t care about storing music, they have a natural expectation that they can access content whenever they like, so what’s the point of storing anything? They don’t have music libraries other than what I initially gave them on their iPads. They have playlists, and they use the offline playlist thing, that’s about as close as they come to storing music on their device.

Leave a Reply

Your email address will not be published. Required fields are marked *