At the SXSW Music show this year, people are buzzing that Apple is getting close to launching a subscription music service to take on Spotify.
An exec in the digital music business told us an announcement could be coming in days. Digital Music News also reported hearing this buzz from multiple execs at the show.
And of all the rumors floating around, this has to be the juiciest: executives keep pointing to a possible on-demand streaming service ahead from Apple, including a tight tie-in with iCloud and iMatch. That would present a huge problem to players like Rhapsody and Spotify, though Apple is playing it characteristically mum. "Apple doesn't like to lose in any category, they like to dominate," one executive noted.
It's just a matter of WHEN not IF. And when it does happen, it will be a HUGE turning point for subscription music. Billboard Hot 100 counting on-demand streaming is probably another turning point.
Spotify is taking off (~$600 million a year in revenue). It grew from 1 million to 3 million in a space of ~10 months (March 2011 to Jan 2012).
January, 2010:------------ 250,000 paid subscribers
March 17, 2010:----------- 320,000
July 20, 2010: ---------------- 500,000
December 8, 2010: ------ 750,000 March 8, 2011:--------------- 1,000,000
July 14, 2011: -----------------1,600,000
Sept 21, 2011: ---------------- 2,000,000
Nov 23, 2011: ------------------2,500,000 Jan 26, 2012: -------------------3,000,000
It's no surprise that Itunes/Apple is working on a subscription service in order to compete.
It's not just Spotify that Itunes need to worry about.
Spotify: ~3,300,000 paid subscribers
Deezer: ~1,500,000 paid subscribers
Rhapsody: ~1,100,000 paid subscribers
Muve Music: ~650,000 paid subscribers (this could pose the biggest challenge if wireless phone carriers like AT&T, Verizon, Sprint and T-Mobile follow suit.........Muve Music belongs to a prepaid carrier with 5 million users.....aka tiny in comparision. It's part of a prepaid cell phone service bundle of unlimited talk, text, data and music downloads).
If the Big 4 Wireless Carrier do a "Muve Music", Itunes would pale in comparison. They have between them some 260 million users. If 20% subscribe to a music plan with their cellphone service bundle, that's 52 million paying subscribers.
(music industry wet dream).
To repeat, if AT&T, Verizon, Sprint and T-Mobile do a MUVE MUSIC, within 2 years, we could have 52 million music subscribers in the USA alone.
Streaming services don't make that much money actually but this would definitely be a part of iCloud if it is a real thing. Apple has the most ties with the music industry than any other tech company so it makes sense. And they wouldn't have to struggle as much to get deals.
Streaming services don't make that much money actually .
Wrong.
Streaming services makes the MOST money per paid user.
Average Spotify paid subscribers pay $110 a year for music.
Average Itunes downloaders pay $40-50 a year for music.
Average American pays $22.5 a year for music.
Here's a simple math.
10 million paid users at $110 a year = $1.1 billion a year.
Spotify also have ad-revenues from free users but let's ignore that for now.
600,000 out of 5 million users = 12% users base and GROWING
It will keep growing because more and more people are switching to smartphone and Muve Music got a 93% satisfaction rate. A rate unheard of in prepaid cell phone.
Here's a 15 seconds ad that aired on TVs. It's easy to explain if you watch it.
If the big carriers adopt, it will be the biggest game changer in the history of music. Bigger than the invention of CD and the invention of Itunes/Ipod. It will revolutionize how people buy music.
It will be like how people buy "unlimited TEXTING" on their smartphones.
Cricket is part of Leap Wireless. The tiny line at 5 million. And yet, it is adding ~650,000 paid music subscribers already in just 1 year probably getting a lot of attention at AT&T, Verizon, Sprint and T-Mobile.
Apple is in a GREAT position to take advantage of this since they have the iphone. The most important device for AT&T, Verizon and Sprint.
For example, "Sprint has entered into an agreement with Apple to purchase over $20 billion worth of iPhones over the next four years." That should put into perspective how powerful Apple is when it comes to phones for these carriers. Apple could use their influence in getting their subscription service in the door.
Apple: "Iphone can only be had with iStream attached. You guys will also get a % of the subscription revenue." AT&T, Verizon and Sprint: "Apple, thank you very much. This is a sweet deal for us as well. Where do we sign?"
But those who have tried Spotify know it's like a magical version of iTunes in which you've already bought every song in the world
It's $10 a month and you can listen to 15 million + songs on your smartphone.
No need for internet connection (put it in offline mode and you can listen up to 3,333 songs).
