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.
sounds completely farfetched. How did they arrive at those numbers since Apple doesn’t communicate on them ? By doing a survey on a 100 people in their hometown ?
It doesn’t really sound that far fetched. A lot of people are still giving Apple music a test drive. Not all will stay. Most everyone has already tested Spotify. Those who subscribe are more likely to stay. Plus Spotify has Spotify free. Many premium subscribers have already been using Spotify Free for months and for the most part already know if they are going to like Premium before they give it a run.
Does the Spotify percentage apply only to paid subscribers? If it includes all Spotify users, it doesn’t mean much, because there is no incentive to unsubscribe from a free service.
Of course it should only apply to paying “subscribers.” As you observed, there’s no need for non-paying “subscribers” to ever leave Spotify.
The report notes the distinction that Apple does not have a free tier (and that Spotify’s free tier seems to help them to convert a number of free users into paying subscribers).
I don’t believe a TIDAL purchase is a necessary component for Apple to catch up w/ Spotify. It’s more likely that tweaks to the product interface are in order and some creative promotional offers. Remember Spotify’s 3 months of premium for 99¢ deal? That converted millions of free tier users into paying subscribers that stuck around after the promotion.
Another factor to consider is there are likely a number for users who are taking advantage of the offered 3 months free @ Apple Music and then canceling, never intending to pay a subscription fee.
I think just having the Apple name alone alienates a lot of people. I believe many just have a tendency to assume Apple Music requires an Apple device. Think about it, how many people who own iPhones would use a music streaming service called Android Music? If Apple wants to succeed, they need to drop the Apple name and market the heck out of their “new” service.
Fantastic news! It is very encouraging watching all those millions of people abandoning all paying streaming services.
In our days, there is so much free, beautiful, and legal music that listeners no longer need to pay to stream/download music. Music is free and always will.
I think it’s natural that many consumers will pop in, give it a try and pop out if they want to not spend the cash..
Spotify do have an advantage in their free tier .. if Spotify was on a level playing field with Apple music in only having a paid subscription model then I’m sure it would reflect the same scenario.
Me Me Me……
Personally I’m still much more in favor of the iTunes paid download product, why rent when you can own..
The idea of having another bill to pay each month irks me somewhat ..
Buying songs from iTunes and having them permanently in my personal music collection is hugely preferable for me.
If I want my iTunes music downloads on CD then iTunes can burn to disc very easily.. (as long as you have a CD drive, I purchased the external CD drive for my MBP)
You know the fundamental problem with owning music? The same fundamental problem of owning movies. Are you going to consume that piece of media 1, 3, 5, 10 years down the road? So you listen to a song, an album or whatnot pretty heavily when it first comes out or when you first discover it. But later on you almost never revisit that content. Maybe years down the road that song pops in your mind and you go for a nostalgic spin, but that’s few and far in between. With subscription service, you’re paying for access. Sure 1.99 a track is not that much to have to worry about getting your money’s worth but even if you build out a fabulously large repertoire of music it will mean almost nothing when you are in your 40s or 50s. Somethings are meant to be rented. Somethings are still meant to be bought and owned. Music is the former, and not the latter.
Apple doesn’t want to catch up to Spotify. That is a marketshare argument that Apple never plays.
In every market that Apple is in, Apple has always been in the minority. And Apple has always targetted only the upper end of the market. This allows Apple to stay away from any accusation of being a monopoly. And this allows Apple to integrate its services far more than any single competitor can do. By being in the minority, Apple gets freedom to do what it wants to create the best product for its customers.
What Apple pays attention to are improving its products to the best it can, to improve the user experience the best it can. The customers will then line up for its products.
Certainly, the initial version of Apple Music is rough. But with the next versions of iOS and Mac OS, Apple Music ‘s interface is getting better and better. It is the quality of the product that matters most to Apple, not marketshare. Build a better mousetrap and customers will come.
Apple does pay attention to customer satisfaction. This is why it is always improving its products.
Again: Apple does not want to nor need to catch up to Spotify, just like Apple doesn’t want to nor need to catch up to Google Android nor Microsoft Windows.
I’ll hev r leave Spotify. I enjoy the service plus they didn’t try to hijack my iPhone like apple did.
Also, I use the djay2 app and can stream Spotify through it. Po lil Apple.
I think this is bad UI finally catching up with Apple. It was always complicated to use as they added more and more features to iTunes, but the merger with Beats made everything a complete dogs dinner. Even if people want to use Apple Music, it is way too counter-intuitive and I feel that short of a complete ground up re-design, divorced of the curmudgeonly iTunes app they will continue to see churn and cede users to Spotify which gets better every day you use it.
Spotify discover service is the first I have seen that has super-smart algorithm and it’s way better than Apple Music.
Anyway, both Apple Music and Spotify provide free trial for people to try. Spotify has the free version that allows people to listen to music. And Apple Music provides 3-month trial for people to decide whether to subscribe or not. Apple Music and Spotify are different, but either of them will not let you know for your enjoying the songs.
After all, the main purpose to use Apple Music or Spotify is to access millions of songs (especially the favorite ones) and listen to them with good experience. Even though there is problem after subscribing (the restrictions on playback device due to DRM), it can be easily solved by DRM Music removers. http://drm-wizard.com/ultimate-list-of-mac-drm-removal So it is totally your choice to try Apple Music or Spotify.
I found a spotify downlaoder https://drm-remover.com/spotify-music-converter-win/ from the link you said. It works! Thanks!
This article is very stupid. How can you compare the number of users between those two services. Spotify is 8 years old, apple music 1 !
If you want to compare them then at least you should come to the conclusion that apple music already got more than the half of spotify users in 1 year. In 2016 there are over 1 billion apple devices online. You have to be kidding me to not see that apple music is going to outpace everything in no time if they do their homework