News - 07/07/2016

Apple Music's high churn rate shows user retention problem

Apple Music's high churn rate shows user retention problem

Apple Music, recently under the spotlight more for the talks about a possible acquisition of competing streaming platform Tidal and for the accusations from Spotify about its alleged foul play in the app store, is now making the industry news again because, according to a new study by analysts Cowen, it has a churn rate of 6.4% per month. A churn rate is a ratio showing "the annual percentage rate at which customers stop subscribing to a service": Cowen's analysis stresses the comparison with Spotify's, whose churn rate is 3 times lower.  This equals to seriously bad news for Apple and it also puts its potential bid for Tidal under a new light: the acquisition of Jay-Z's founded platform would definitely help retain more users, besides adding new ones, as its exclusive-based marketing strategy works pretty well in that respect.

Apple Music is struggling to catch up Spotify's user base: while its music service currently relies on 15 million paid subscribers, Spotify's are 30 million.  Should both the churn rate and the growth rate remain unchanged for the two companies, in one year the gap between them would end up widening even more.

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