Apple’s Music Business Has Hit an Inflection Point: Here’s How



Apple Music now has 15 million paid subscribers

Apple’s (AAPL) music business had been declining for many quarters before recently hitting an inflection point, according to the company. The credit for this goes to the new music subscription service from Apple, Apple Music. Apple launched this service one year ago, and within that short time, managed to attract 15 million subscribers. Apple discussed this at the recent Apple Worldwide Developers Conference. During the event, Apple also announced the user-friendly redesign of its Apple Music app.

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Apple is making efforts to grow its music streaming service, as the growth potential of this market remains high. According to a report from the Recording Industry Association of America, streaming was the largest component of the music industry in 2015 for the first time ever. The chart above shows the streaming component (at 34.3%) surpassing the digital downloads component (at 34.0%) in the United States.

Spotify faces growing competition in music streaming market

Although Apple Music is still behind the music streaming market leader Spotify, which has 30 million paid subscribers, it is growing at a rapid rate. Spotify took more than ten years to reach where it is now, while Apple Music is just one year old. Spotify recently announced that it now has a total of 100 million subscribers, but with only 30 million paid subscribers, it is still not able to break even. Additionally, Spotify is also facing growing competition from Pandora (P).

A few weeks back, Spotify announced that it will now use the cloud offering from Google (GOOG) to run its music streaming service. This was an important win for Google, which is competing for a share of the cloud service space against Amazon (AMZN) and Microsoft (MSFT). Amazon and Microsoft currently lead the cloud service market, with shares of 31% and 9%. respectively, according to a report from Synergy Research Group.


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