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24
Jun
2015

Streaming Music, We Don’t Want No Drama!

POSTED BY Steffen Sorrell

6 days before launch, the anticipation for Apple Music’s launch has reached fever point amongst the tech media, with some publications pitching the smartphone behemoth as a modern-day Goliath versus Spotify’s David.

Such dramatic headlines undoubtedly draw the readers in, but in reality, when one looks at the state of the streaming music market today, things are perhaps a little different.

Coexistence is Possible
Let’s take some rough figures: Spotify has 75 million active users, while iTunes has around 880 million accounts. Adding our own figures for users of cloud music services combined with Apple’s iTunes user base, the addressable market for various music streaming services is approximately half of the Internet’s user base. Needless to say, not everyone signs up for this type of service, which goes a long way towards explaining how Spotify has only captured 75 million users in nearly a decade of business; where a substantial portion of that operating period has been with a free (ad supported) tier as a low-barrier to entry.

Now let’s take another figure: YouTube has 1 billion users; about 33% of the world’s Internet users. There’s lots of music available on there, for free, so long as one can stomach the ads.

All of these figures go to show that the market is very much open; the likelihood that Apple Music will lead to Spotify’s demise is actually very low, when one considers that even if users are tempted away from Spotify to Apple Music, there are still subscribers to be tapped, be it current YouTube streamers or those for whom broadband services are improving to the point where continuous music streaming is possible.

Profits? Oh, OK.
The real question, however, remains: can Spotify and Apple make a profit from streaming music? The former has failed so far, and at some point, the investors will come a-knocking, to which Daniel Ek will presumably say: ‘Oh OK.’