Apple could quickly become the biggest streaming music subscription service in the world after it relaunches its Beats Music service later this year, according to a survey conducted by music industry analyst Midia Research.
The company asked 1,000 Americans whether they would subscribe to an Apple music streaming service for $7.99 a month, and found 10% saying they’d be “very likely” to sign up, and another 10% saying they’d be “likely” to. When it came to iOS users only, 15% were in the “very likely” camp.
“Make no mistake, if 15% of Apple’s entire 500m or so iTunes users were to subscribe, the subscription market would be transformed, growing the total number of subscribers by 75 million,” wrote the report’s author, Mark Mulligan.
“Even a year one target of a quarter of that would be transformational to the subscription market, but both numbers are far short of the approximately 250 million iTunes users who regularly buy music downloads.”
There are important caveats that come with these claims, though.
First: since the survey was conducted in mid-February, reports have suggested that Apple has been haggled upwards by music labels to $9.99 a month for its streaming service – matching Spotify and other rivals.
Mulligan still believes that the $7.99 price “will happen eventually even if it does not in 2015”, but it’s fair to question whether those who ticked “likely” may have been fewer in number if the survey had presented them with the higher price.
Second, the 250 million iTunes music buyers is probably a better starting point for these calculations than the 500 million iTunes users – a figure that includes people who download apps but don’t buy music.
15% of 250m would still be 37.5 million people, which would be more than double the current subscriber total of the most popular streaming music service – Spotify with its 15 million paying customers.
Third, if Apple signed up 37.5 million subscribers, they wouldn’t all be new to the streaming music market, because some would be poached from rival services. Midia Research explored that in its survey too, though.
“62% of existing music subscribers consider themselves likely to subscribe to an Apple $7.99 service,” wrote Mulligan – again, the percentage might have been lower if the price was $9.99, since that would not be cheaper than those existing services.
“Apple has lost a lot of its most valuable download buyers to services like Spotify, Rdio and Rhapsody and it will expect to ‘win back’ the digital music spending of some of those consumers. It is no coincidence that this will likely be Apple’s first app developed for Android.”
Midia also asked people how likely they’d be to upgrade to a newer iPhone or iPad to get a discounted $5.99-a-month music subscription, and found 8% were very likely and 12% likely.
Meanwhile, when asked if they’d buy a “music edition” iPhone or iPad to get two years’ free access to the service, 9% said they were very likely and 15% said they were likely to do this.
“Though there is no direct evidence Apple is planning such a move, this illustrates that Apple has multiple ways in which it can try to drive adoption of its subscription service,” wrote Mulligan. “The iOS ecosystem is a rare asset that rival music services simply cannot compete with.”
Apple bought music accessories firm Beats Electronics in 2014 for $3bn, including its streaming music service Beats Music.
Beats co-founders Dr Dre and Jimmy Iovine remain within Apple alongside Beats Music executives Ian Rogers and Trent Reznor and newly-recruited DJ Zane Lowe piloting a relaunch that is expected to come under the iTunes brand, and be announced at the WWDC event in June.
The service will compete with Spotify, Deezer, Rhapsody / Napster, Rdio, Google Play Music, YouTube Music Key and Tidal – the latter being the streaming service that’s in the process of being relaunched by Jay Z and a group of fellow musicians.
It will also launch at a time when the music industry is fiercely debating the value of free streaming services like Spotify’s advertising-supported tier, with critics ranging from Taylor Swift to Universal Music boss Lucian Grainge.
Apple, and Iovine in particular, is encouraging those critics behind the scenes – a hint that Apple sees the freemium Spotify and YouTube Music Key as its most dangerous rivals – while also courting prominent musicians to grant iTunes periods of exclusivity for their new albums.
This article was written by Stuart Dredge, for theguardian.com on Wednesday 1st April 2015 12.50 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010