News - 27/04/2016

Apple Music hits 13m subscribers, but Apple sees first revenues decline in 13 years

Apple Music hits 13m subscribers, but Apple sees first revenues decline in 13 years

Apple revealed on Tuesday’s Q1 earnings call that its music subscription service Apple Music has grown to over 13 million users. 

The company faced its first quarterly revenue decline its 13 years and Tim Cook probably wanted to showcase any available numbers pointing to growth (the stock is still losing around 9% after-hours). Apple Music belongs to the company's "services" division, which includes the App Store and is performing well.

Apple Music added two million subscribers since February, cementing its lead as the 2nd largest music subscription service in the world, and if it was to continue growing at the same pace over the rest of the year it could easily reach 20 million subscribers by the end of 2016. Spotify by contrast has 30 million subscribers, and its growth shows no signs of stopping, which means that it may take some time for Apple Music to catch up.  

However, the music subscription market appears to be extremely volatile due to the business of “exclusives” that in Q1 placed Tidal firmly on the map purely thanks to the Kanye, Rihanna and Beyonce albums (as well as Prince’s catalogue). 

Apple Music is also keen to present its listeners with exclusives: Drake’s new album for example will be available exclusively on the service for a week. In return, Apple agreed to be a sponsor to Drake’s upcoming “Summer Sixteen” tour, representing the first time the Cupertino company backed a string of live dates like this. Although sponsoring tours is an expensive enterprise, if the branding is done right it could also get lots more people to try out the service, and thanks to Apple's bottomless cash reserves that's an investment the company can easily make.  

 

(Andrea Leonelli)

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