Just over half the people who sampled Apple Music have stuck around to use the service regularly, a study by music industry analytics firm MusicWatch has found.
Apple recently took a victory lap for hitting the 11 million user mark among people who had sampled its new service, which is meant to compete with similar offerings from Spotify and Pandora. But 48% of those users aren’t there any more.
The survey studied 5,000 Apple customers aged 13 and older, two-thirds of whom told researchers that they were either “extremely likely” or “very likely” to pay for the service when their free trials ended. On the other hand, 61% of them turned off the auto-renewal option on the service.
Apple disputed the figures. The company told the Guardian that its internal figures put the rate of retention much higher: “Of the people that have signed up for the trial 79% are using the service,” said a spokesman.
On the bright side, Apple Music has done nothing to hurt the company’s pay-to-download bottom line: “While it has become popular to use the term ‘streaming wars’ to characterize the current state of the music industry, very few Apple Music users said they had stopped using their online radio, audio on-demand or video streaming services, as a result of using Apple Music,” wrote Russ Crupnick, MusicWatch’s managing partner.
Paying subscribers aren’t yet a majority of any business model in the streaming music world that also includes a free option: Spotify announced in June that it has 15 million subscribers out of its 60 million active users, while Pandora maintains a base of about 3.8 million Pandora One subscribers, according to BTIG analyst Rich Greenfield.
Media and tech analyst Mark Mulligan predicts in a blog post that Apple’s auto-opt-in will mean that about 6 million subscribers will end up on the books for the first billable month (many realizing they are paying for the first time), dropping sharply once people figure out they are being billed. Mulligan believes by the end of the year Apple could reasonably expect to have 8.7 million paying subscribers. “This assumes a (modest) 5% monthly churn rate and the 25% long term subscriber conversion rate,” he wrote.
Greenfield was skeptical about the long-term business model. “Similar to Dash Radio and terrestrial radio, we believe ‘radio’ requires personalities, not algorithm-driven playlists without personality,” he wrote in a note to investors in June. “Human voices and curation are critical to building a brand and personal relationship in radio – not to mention the power that gives you to build a sponsorship/advertising model if so desired.”
This article was written by Sam Thielman in New York, for theguardian.com on Tuesday 18th August 2015 20.41 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010