Apple Music: Too Little Too Late?

  • Apple mis-timed their entry into the music streaming business.
  • Spotify's paying subscribers dwarfs Apple's.
  • There are still opportunities available to Apple in this rapidly growing market.
  • Music streaming adds to Apple's bottomline, but is unlikely to be a game-changer.

In the tech world timing is everything. And one wonders why Apple (NASDAQ:AAPL) stood aside and watched Spotify dominate the online music market. iTunes sales have been on the decline for a while now. According to the Atlantic, iTunes music sales declined by 13% between 2013-2014, while streams increased by 54%. And with widening access to superfast broadband, expect the number of streams to increase.

See Also: Is Apple Music worth the effort for Apple?

The late arrival of Apple Music into the marketplace is another bullet point in a growing list of late entries by Apple. For instance, the iPad Pro arrived 3 years after the release of the Surface Pro, and the Apple tv only just added gaming capabilities- a market it should have captured years ago due to the millions of games on Apple’s app store.

The new revenue stream for the music industry

Evidence suggests that music streaming is the new model for the music industry. Although some labels and artists are unhappy with the miniscule rates per stream, this is something they will just have to deal with. From a consumer’s perspective, it makes financial sense to pay for an unlimited music streaming subscription rather than buy individual albums. At the end of the day, they get access to millions of songs,. and can stream albums on the day they are released.

The issue is that Spotify’s growth would have been stunted if Apple had entered the streaming market years ago. As previously touched on, it seems like Apple’s ability to foresee new opportunities is waning. It used to be the leader in this regard; however, it now looks to others to take the first mover risks.

Big player: Spotify

According to Spotify’s team, Spotify now has 75 million subscribers with 20 million of those being paying subscribers. On the other hand, Apple have been slippery in providing concrete data for their Apple music offering. According to Apple, 11 million people signed up for the 3 month trial, of which 79% have been ‘retained’. In this context, ‘percentage retained’ is fairly ambiguous. Was it the percentage of people who still have Apple music on their phone, or the percentage of users who have signed up for the subscription. Apple declined to comment when contacted to provide more data on the figures.

Interestingly, the timing of Spotify, Rdio, and Deezer’s entry into the market was practically impeccable. Broadband and wifi speeds were on the rise, which allowed the music streaming industry to exist in the first place. Spotify is now well established in the space.

The fact that Spotify has a free ad-supported tier has been integral to its success. By giving consumers a ‘taste’ of what is on offer, they are likely to want an experience which does away with ‘annoying’ audio ads. On the other hand, Apple music doesn’t offer a comparable option. After the free trial is over, one must pay to enjoy their tunes.

It is also worth noting that as time elapses, any streaming service, no matter how well-present and intuitive, will struggle to penetrate the market. People have already created playlists on Spotify, followed friends, and gotten used to the interface. As a result, the costs of moving to a streaming service with very similar features might negate any benefits.

The Apple opportunity

Apple Music is still an extra source of long-term revenue. Apple knows that their brand name will still get people to atleast give their service a try. Plus, with aggressive plans to establish a stronger presence in China, this is an opportunity to establish in a country with less competition in terms of music streaming services.

The opportunities for Apple to use their music streaming platform to create unique experiences for consumers is vast. For example, they could have subscriber-exclusive concerts or bundle a 6 month subscription with new products as a sort of ‘bait’.


Despite their shortcomings in this area, Apple stock is still a solid buy-stock. However, don’t make the mistake of buying Apple because you think their music offering will add considerably to the revenue or the bottom line. It won’t. This is just Apple mopping up some market share, of which they could have had a larger share if they had arrived earlier.

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Comments on this article and AAPL stock

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Mark Langston
The author fails to mention a few key factors that might've caused Apple's late entry into the streaming market, chief among them that Spotify is just barely profitable. Why risk going into a completely new market when the so-called market leader can barely keep the lights on?

Secondly, Apple is almost NEVER first to market with a product or service. Not the first to make an MP3 player, not first to smartphones, not first to tablets and not first to smartwatches. Yet Apple leads in almost everyone of those categories.

Lest we forget that Apple has over 800 million credit cards on file, all ready to buy an app, a movie or a song at the drop of a hat.

Having said all that Apple didn't do themselves any favors with the launch of Apple Music. It's been largely criticized for the interface (I think it's great) and there's been some confusion and missteps in how it handles iTunes Match libraries (I never had a problem but others did).

One thing the author is right about, however, is Spotify's stickiness with multi-year users building rather extensive playlists and collaborating with others' playlists. Personally I like the idea of having a one-stop shop solution for my purchased content and streaming content in one app without any syncing or unnecessary downloading and there are a host of features that Apple Music has that Spotify doesn't that, I believe, make it a better app and experience.

I won't pretend to know if Apple Music will ever overtake Spotify but to suggest that it's "too little, too late" is to encourage companies to give up unless they can unseat the market leader. If that were true then I suggest Mr. Jawula contact Microsoft and tell them to stop making Lumia phones. If Microsoft can't beat Apple or Samsung then don't bother getting out of bed.
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user profile picture
Hi Mark, first of all thank you for taking the time to comment. You have raised some comments which I believe is likely to be on other people's minds so thank you.

You mention that Apple has never been first to everything. Let me cast your mind back. Itunes was the first product to successfully provide a large catalog of music available for sale legally. This is one of Steve Jobs legacies. He was the first to bring all the top major labels together in order to sign the aforementioned deal. Isn't it ironic that the pioneer in this space let Spotify dominate future music industry model for providing content?

You provide some insight into Apple Music from a user's perspective. The huge traction in the market space beats user experience anytime. You see, people have already made Spotify their home.

Regarding the title, there is a reason why it was phrased as a question: none of the contributors on this site can claim to be able to see the future. However, all the signs point to it being too late for Apple Music to be the number one.

Having credit cards on file doesn't really mean much. You mention "at the drop of a hat" almost as if past Apple customers are somewhat forced to buy. I just think it was down to the phrasing.

At the end of the day, the people will always choose the service which they are comfortable with. It is simply unrealistic to think that millions of Spotify's customers will decide to move to Apple Music because of an arguably superior user experience.

In conclusion, thanks again for your comment. I have truly enjoyed reading it. Finally, I don't advocate a defeatist approach. However, companies should give themselves a chance. If a 100 metre runner leaves their blocks 2 seconds after the gun, what are the chances of getting gold?

I look forward to more comments from you.
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