Personal Finance

With 38 Million Subscribers, Apple Music Growth Appears to Be Accelerating

HomePod with album covers in the background

It's been just over a month since Apple (NASDAQ: AAPL) reportedly hit 36 million subscribers for Apple Music, and services chief Eddy Cue just disclosed at SXSW that Apple Music has hit 38 million paid subscribers. Apple Music and Spotify are both growing, and the Mac maker continues to maintain a proportion of having about half as many paid subscribers as its larger rival. Spotify, which needs to go public within a matter of months, had 71 million premium subscribers at the end of 2017 and has likely added a few million in the months since.

In an encouraging sign, Apple Music growth appears to be accelerating.

HomePod with album covers in the background

Image source: Apple.

Playing catch-up

Apple does not disclose Apple Music subscribers regularly or on a consistent schedule, instead giving updates sporadically. The company just added 2 million paid subscribers in about five weeks, which is much faster than before. In comparison, it took over two months to add 2 million paid subscribers in 2016, from 11 million to 13 million, and another 2 months to hit 15 million. The next 2 million subscribers similarly took over two months to garner.

Chart comparing paid subscribers for Apple Music and Spotify

Data source: Apple and Spotify. Chart by author.

That might seem like modest acceleration at best, but every little bit helps as Spotify continues to grow and maintain its lead, thanks in part to growth in emerging markets that Apple addresses poorly since it does not have a free, ad-supported tier.

Perhaps more importantly, Spotify's paid subscriber growth is also accelerating, taking just five months to add the last 11 million subscribers, suggesting that the broader music-streaming market is strengthening. Like the old saying goes: A rising tide lifts all music-streaming services.

Spotify goes where Apple won't

Apple Music is one of the most important pillars of the company's growing services business, which is now a $31 billion segment in terms of trailing-12-month revenue. Investors don't have a breakdown of the Apple Music subscriber base (i.e., how many people subscribe for a discounted annual plan or are part of a family plan), but a given user pays at most $120 per year ($10 per month). At that ceiling, Apple Music could be enjoying a revenue run rate north of $4.6 billion. Not bad for a service that was started less than three years ago.

Still, Spotify enjoys several advantages that are derived from strategic differences. Apple Music is available on Android, but that's about as far as the service goes with cross-platform support. Spotify has a massive stable of third-party integrations that guarantee its ubiquity, including all of the top smart speakers on the market.

In contrast, Apple Music is mostly reserved for the company's HomePod, and don't expect the service to get official support from Amazon.com's Echo family or Alphabet subsidiary Google's Home family, both of which support Spotify as the default voice-controlled music service. Spotify will benefit by simply going where Apple won't.

10 stocks we like better than Apple

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Apple wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of March 5, 2018

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends GOOG, GOOGL, AMZN, and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AAPL

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More