Personal Finance

Apple Music Now Has 30 Million Paid Subscribers, as Apple's Content Ambitions Grow

Apple Music on iPhone and iPad

It's been a few months since Apple (NASDAQ: AAPL) updated investors regarding its Apple Music paid subscriber base, but the company has now done just that. In an interview with Billboard , Apple Music chief Jimmy Iovine confirmed that the company now has "well over 30 million" paid subscribers. That's up from the 27 million in June, which translated into a $3.25 billion run rate for the service. Creative director Zane Lowe and head of content Larry Jackson also sat in for the interview.

Along with Spotify, which had 60 million paid subscribers as of July, Apple Music is helping drive the music industry's comeback. After decades of growth that peaked around 2000, the U.S. music industry suffered severe contraction over the following decade. Revenue is now bouncing back in a big way, thanks primarily to the growing popularity of paid streaming services. Still, Iovine is just getting started.

Apple Music on iPhone and iPad

Image source: Apple.

Hey, big spender

Despite a bullish report on the global music industry that Goldman Sachs put out last month predicting that global music revenue would soar to $41 billion by 2030, Iovine is a skeptic. Paid services continue to do well, but the competition from free services is ever looming. Iovine wants to include as much content as possible in order to justify the $10 per month that subscribers pay, while looking to differentiate Apple Music from competing paid services.

Apple plans to invest $1 billion annually into Apple Music. That's not an insignificant amount of money, but Apple can easily afford it as part of its goal to double its services revenue by 2020. That figure also corroborates a Wall Street Journal report from last month that Apple's budget for original content is going up , and just a day after The Hollywood Reporter said that Apple is currently shopping for a blockbuster TV drama on the level of Game of Thrones or Breaking Bad . Thus far, Apple's original video content has been included in Apple Music, although I personally think there's an opportunity for the company to create an online video-streaming service.

John Legend and Alicia Keys in a car on Carpool Karaoke

is one of Apple's first forays into original TV content. Image source: Apple.

Carpool Karaoke is one of Apple's first forays into original TV content.

The Hollywood Reporter article ends with a quote from talent agency ICM Partners' managing director, Chris Silbermann, that speaks to what Apple investors should also be wondering right now (emphasis added):

Jamie and Zack [the Hollywood execs that Apple poached from Sony earlier this year] are good guys, and they've done business with all of us for decades, and it's Apple, so everybody will sell there. That being said, they need to articulate to the creative community and the industry at large their marketing, release and distribution strategy. Simply, what does it mean to be an Apple show?

This is at the heart of why I've had doubts about Apple's strange fascination with original content. Apple doesn't appear to have a clear or compelling strategy with original video content (I don't consider including that content in a music-streaming service as particularly compelling). If someone within the industry, who undoubtedly has more insight than public investors, can't even figure out Apple's angle, that doesn't inspire a lot of confidence in the Mac maker's current strategy.

Without a clear strategy, Apple's deep pockets will only go so far.

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Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends 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.

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