Apple Music: Who's Paying for the Streaming Service
— -- With the free Apple Music trial over for early adopters, CEO Tim Cook revealed the streaming service is off to a healthy start when it comes to converting those people into paying subscribers.
Cook said Apple Music has 15 million users on its streaming-music service, while speaking at WSDJLive, the Wall Street Journal’s global technology conference, on Monday night. Of that group, he said 6.5 million are paying subscribers while the remainder are still signed up as part of the free three-month trial subscription offer.
With Apple revealing in August that 11 million people had signed up for the service, the latest member data shows the company has had initial success in converting many of those people into paying members. (It's also worth noting that in Apple Music's first month with paying customers, it's possible some of those people did not cancel their free subscriptions.)
"We've called this a real robust start out of the gate for Apple Music. This is a pivotal window of opportunity coming out of the June launch," Daniel Ives, managing director of the technology, media and telecom research group at FBR Capital Markets, told ABC News.
"We were expecting 5 million subscribers, but 6.5 million? I would characterize this as a home run relative to how the street was thinking," he said.
By comparison, Spotify -- which is the dominant player in the streaming space -- announced in June that it reached 20 million paid subscribers to its streaming service with a total of 75 million active users. Paid subscriptions, which start at $9.99 per month, were up 100 percent from last year, according to company data released in June.
Whether Apple can attract first-time streaming subscribers and potentially win over customers from competitors will continue to be the biggest challenge as the service grows in the next year and takes on the Android market.
"Conversion is going to be key. It’s going to be around content, enhanced services, building a unique Apple Music that can separate itself and build a moat around the iTunes franchise," Ives said.
Apple does have two major strengths that will play in its favor as it entices new members and edges closer to Spotify in terms of market share.
"I think at one point in late 2016 they could come close to catching Spotify from a market share perspective because 1 billion iOS devices and the [strength of the] brand," Ives said.
