As part of its continued efforts to diversify, Apple has put a lot of money and power into trying to grow its Apple Music streaming service. In fact, the company even took the unexpected step of hiring legendary music-industry veteran Jimmy Iovine to head its latest enterprise following Apple’s purchase of Beats for $3 billion back in 2014. However, recent news suggests that the move of hiring Iovine hasn’t worked out quite as well as Apple would have hoped after it was reported that Iovine will be leaving his post at Apple Music as soon as his stock options have vested.
The Formation of Apple Music
When it purchased Beats in 2014, Apple executives were hoping that the acquisition and the hiring of Iovine would enable its new streaming service to eventually compete with industry leader Spotify. In one sense, Apple Music has at least partly achieved its goals. After all, the company now has attracted more than 30 million subscribers in less than four years.
Spotify: 70 Million Subscribers and Counting
Unfortunately for Apple, Spotify still continues to pull even further ahead of the competition in terms of total subscribers. In fact, just one day after the news of Iovine’s departure surface, Spotify took to Twitter to announce that it had just reached 70 million subscribers. Astonishingly, this means that the streaming service gained an additional 10 million subscribers in the past six months alone, which represents a 16% increase overall. Moreover, these numbers don’t take into account the total number of Spotify users, which the company reported in mid-2017 to be over 140 million.
These numbers indicate that the majority of Spotify users take advantage of the ad-supported, free streaming service instead of signing up for an ad-free subscription. Nonetheless, these free users are still capable of earning the company major profits through advertising revenue, and the amount that Spotify can charge for its ads will only continue to grow as more and more people continue to use its streaming service. This type of success is partly behind Spotify’s decision to take the company public, which should happen sometime during the first half of this year and has the chance to earn the company even more profits.
Spotify’s Rise to Mainstream
Spotify is a music and video streaming service that was originally launched in 2008 in Stockholm, Sweden. Although Spotify has faced criticisms from artists that its service doesn’t properly compensate the musicians themselves, these criticisms haven’t affected its ability to attract consumers. Most of these users are drawn to the service by its ability to allow them to listen to millions of songs in real time. With a constantly growing catalog of music, Spotify has quickly changed the way people listen to and buy music.
In fact, many have pointed to streaming services like Spotify to help explain why illegal music downloads have dramatically declined over the past few years. There are also those that suggest that, because streaming services do not involve a one-time purchase unlike buying a song or album, they actually provide a more constant, long-term source of revenue for artists. As a result, many independent artists have been signing up and releasing their music solely through Spotify, which has further increased its appeal.
This is exactly the sort of thing that Apple Music was hoping its partnership with Jimmy Iovine would bring, and to some extent, this worked. After all, it was Iovine who was responsible for some of Apple Music’s most popular features, such as its exclusive releases and curated playlists. In this sense, it will be interesting to see where Apple Music goes from here and what plans it comes up with next in an attempt to compete with Spotify.