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Apple buys Semetric to up its game in the music streaming market

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Apple acquires Semetric to enhance Beats service

Apple (AAPL) surprised the world last year when it acquired Beats Music and Beats Electronics for $3 billion, the largest acquisition in its history. The main purpose of acquiring Beats was to give Apple entry into the fast-growing music streaming market. Previously, Apple sold individual songs or albums through its iTunes Store, but consumer interest has shifted toward low-cost subscription services.

For more details on Beats, read Why Apple acquired Beats for $3 billion—its largest acquisition.

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According to a recent report from the Wall Street Journal that cites people familiar with the matter, Apple has purchased UK-based startup company Semetric. Semetric provides an analytics tool with which artists and music labels can understand how a music service is being used. Clearly, Apple is looking to enhance its Beats subscription service to better compete in the growing music streaming market.

Fast-growing music streaming market attracts many players

According to a report from Statista that cites Nielsen data, on-demand audio music and on-demand video music have seen tremendous growth in the last year. As the chart above shows, digital album, digital track, and CD album sales have all declined.

This is the main reason why Apple was first interested in Beats and then Semetric. Aside from Apple, the potential of the music streaming market has attracted other big players. Amazon (AMZN) and Google (GOOG)(GOOGL) have beefed up their music streaming offerings of late. Amazon entered the music streaming market last year with the service Prime Music.

Similarly, Google acquired Songza last year, an ad-supported music streaming service. Pandora (P) still leads the music streaming market, so it’s important that Apple continue to innovate if it’s to overcome the stiff competition in this market.

If Apple becomes successful in its efforts to tap the fast-growing music streaming market, it could benefit the Sector SPDR Trust SBI Interest (XLK), which has 16% of its holdings invested in Apple.

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