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Why Is Apple Music Gaining Subscribers So Quickly?

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Revenue rose 22% in fiscal 4Q16

As discussed earlier in this series, Apple’s (AAPL) Services revenue rose 24% YoY (year-over-year) in fiscal 4Q16 to $6.3 billion. App Store revenue was driven by Apple Music, which grew 22% YoY. Recently, a J.D. Power Streaming Music Satisfaction Study named Apple Music as the top-rated music streaming service. According to the study, 35% of respondents were “strongly committed” to Apple Music. In comparison, 30% of respondents were strongly committed to Spotify and Google Music (GOOG) (GOOGL).

A large proportion of subscribers (almost 62%) stated that device compatibility was the main reason to sign up for Apple Music, compared with 53% for Google Play Music and 52% for Spotify.

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Apple Music now has over 17 million subscribers, up from 15 million in August 2016 and 11 million in March 2016. Apple still trails market leaders Spotify and Pandora (P), which have 100 million and 80 million subscribers, respectively. However, Spotify has only 30 million paid subscribers, and the company has taken almost ten years to reach this figure.

Amazon launches Music Unlimited

Earlier this month, Amazon (AMZN) launched Music Unlimited, challenging on-demand streaming market leaders Apple (AAPL) and Spotify. While Amazon’s Prime Music has approximately 2 million tracks, Music Unlimited has “tens of millions” of tracks. Non–Amazon Prime members can subscribe to a plan for $9.99 per month, whereas Prime members can access this service for $7.99 per month or $79 per year. A family plan for Music Unlimited is $14.99 per month or $149 per year.

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