Apple Music has a huge problem. It’s called ‘churn’…
Last week, Cowen’s John Blackledge and Tim Arcuri shared some information in a recent report related to streaming churn. Specifically, on the rate at which Spotify and Apple Music lose subscribers on a monthly basis. According to Cowen, Apple Music have a subscriber churn rate of 6.4%, which is nearly three times higher than Spotify, whose churn rate is 2.2%.
The news is shocking, especially for those prognosticating that Apple’s streaming service has the potential to outgrow Spotify. But in light of this new information, it’s hard to see this being a possibility. At last count, Spotify surpassed 30 million paying users, and Apple Music announced half of that, with 15 million paying users.
Suddenly, this horse race is taking on an entirely different dimension. Both streaming services are adding, on average, one million paying users per month. But some simple math calculating churn shows how difficult it will be for Apple to catch up to Spotify. If these churn rates are indeed correct, it could prove impossible.
Meanwhile, Apple has been working on securing as many artist exclusives as possible, all part of a strategy to sway customers from Spotify and other competing streaming services. Considering the churn stats, that might be working in terms of getting people to sign up, but not when it comes to keeping people around.
And what about lingering chatter of an Apple acquisition of Tidal? If this is indeed the case, then Apple Music may have a chance to rule the music streaming market. But without a Tidal takeover, the chances of Apple Music catching up to Spotify now seem very slim, at least without radically new growth strategies implemented.
Image by Chris Marchant, licensed under Creative Commons Attribution 2.0 Generic.