According to a report that appeared in The Wall Street Journal, Apple Music could overtake Swedish-based streaming giant Spotify with regards to the number of paid subscribers. This comes as Spotify prepares to go public.
Launched three years ago, Apple Music has been signing up paid subscribers in the United States at a rate that is faster than that of Spotify which has had a longer presence in the market. While Apple’s paid subscriber growth rate has been 5% that of Spotify has been 2% per sources in the music industry. If the pace persists this summer could see Spotify overtaken by Apple Music.
Part of the reason why Apple Music has been growing so rapidly is due to the fact that Apple’s devices have been highly popular. The music streaming service is preloaded on Apple Watches, iPhones as well as other devices that the tech giant sells.
Worldwide however, Spotify’s lead over Apple Music is solid as it has close to two times the number of paid subscribers. Spotify also enjoys a faster rate of subscriber growth across the globe. Other players who have entered the music streaming business include Alphabet with YouTube Music, Amazon and Pandora Media.
Following years during which the music recording industry has suffered declines due to falling sales of digital downloads as well as CDs, streaming services have turned the tide. With music streaming the revenue model is either a monthly fee or having to bear with ads. In last year’s first half paid subscriptions which had grown by 61% became the No. 1 source of revenue in the United States for record companies per the industry association.
No profit yet
Despite the rapid growth of streaming, the business of music streaming has not yet proven itself viable since the tech firms which operate these services are yet to find a way of turning a profit. Spotify has for instance never recorded a profit but believes that could change once sufficient users have been amassed.
While paid subscribers and active users are the metrics that are most closely watched, it is not clear which metrics Spotify will be disclosing once it goes public. Periodically Spotify has been releasing global subscriber totals with the newest figures showing that it has garnered 70 million subscribers across the globe. Apple Music on the other hand now boasts of 36 million paid subscribers all over the world. Last year in September the figure was 30 million.