Can Apple do it again? For reasons I do not fully fathom, streaming music has become all the rage, yet the number of people streaming music to their various devices is dwarfed by the number of customers Apple has on iTunes. What’s going on? Math.
The Apple Experience
If you are at all like most Mac, iPhone, and iPad customers, you’ve probably bought some music from iTunes, ripped some of your aging CD collection to iTunes, and might even have a few hundred songs leftover from the days of Napster (which almost killed the music industry, only to have it be saved by iTunes; go figure).
Apple often seems a bit late to the trend parties (the GUI was there before the Lisa and Mac, music players before iPod, music stores before iTunes, smartphones before iPhone; you get the idea) and so it is with streaming music, now mostly identified with Pandora and Spotify, the latter which claims about 21-million paying customers.
Apple Music is something of a convoluted, inelegant, mashup product; an app loaded with access to over 30-million songs, a streaming service, some ear candy radio stations, playlists, and options for family use on multiple devices for a singly monthly price.
After a few months of usage and a three month free trial period, Apple claims to have almost 7-million paying users; competitive, yes, but still somewhat dwarfed by Spotify’s 21-million (though to be fair, Spotify had a seven year head start, so it’s not as if Apple Music has languished in the marketplace.
It’s unofficial research, of course, but most of the iPhone users I’ve talked to love it; once they figure out how to use it, setup appropriate playlists, and bite the bullet of the family plan price.
Do The Math
Apple has hundreds of millions of iTunes customers but that doesn’t tell the true story about Apple Music. An iTunes customer is more likely to have, 1) purchased and downloaded apps from the App Store, 2) purchased music or TV shows or movies from the iTunes Music Store, 3) use iTunes for ripped music and playlists.
The Apple Music math is much easier. Music has two plans. $9.99 a month and $14.99 a month, for single vs. family, respectively. So, let’s say there’s an average monthly revenue of $11.50 per Music customer. With nearly 7-million customers subscribing to Music, the math runs to over $80-million in revenue per month, which becomes just under $1-billion annual revenue run rate.
$1-billion. That’s not shabby for a business that is just a few months old. Wait. Isn’t the Watch business also a few months old? If CEO Tim Cook doesn’t mind hyping Apple Music subscriber numbers, why no numbers for Apple Watch? The problem here is expectations. Critics look at Watch as a new product of the Mac, iPhone, and iPad class, but it’s really little more than an accessory to iPhone, so sharing numbers publicly would garner undue criticism.
Apple Music is a mashup service; a congealed stew of the past, present, and future; foisted onto Apple customers because the 21st century trend decidedly is toward a monthly subscription service (cable TV, Adobe Creative Cloud, Microsoft Office 365, et al) and, like it or don’t in the hallowed halls of One Infinite Place, Apple must bend with the times.
There is some argument to who said “There go the people. I must follow them, for I am their leader” but today it applies to Apple and Apple Music.