As the music streaming industry continues to see competition heat up with market leader Spotify Technology S.A.’s (SPOT) initial public offering (IPO) last month and Google parent company Alphabet Inc.’s (GOOGL) new premium music streaming offering set to launch next week, Apple Inc. (AAPL) says it has reached a milestone of more than 50 million users.
Apple CEO Tim Cook commented in an interview with Bloomberg Television this week that the number includes both users with paid subscriptions as well as those with free trials. In April, Variety reported that Apple Music had 40 million paid subscribers across 115 countries, and an additional 8 million users with free trials of the music streaming service. (See also: Spotify ‘Closest’ to NFLX for Music, Set To Soar: JPMorgan.)
Users Increasingly Willing to Pay
Apple has been doubling down on its services segment, comprised of businesses such as Apple Music and the App Store, as it seeks to shift focus away from hardware sales to integrate its products with different software and services that can provide recurring revenue streams. As iPhone replacement cycles show signs of deceleration, some on the Street were cautious that the Cupertino, California-based tech giant would fail to meet consensus estimates in the most recent quarter. Apple managed to exceed forecasts, with higher average selling prices (ASP) working to boost top line numbers and optimism regarding new growth segments like Apple Music giving the stock a lift. Apple’s services business grew 31% year-over-year (YOY) to $9.1 billion in the March quarter.
Market leader Spotify, which hit the public market in April in an unusual IPO with no underwriters, said earlier this month that it had 75 million paid subscribers out of a total of 170 million monthly active users. This week, Alphabet’s YouTube announced a new YouTube Music platform offering features such as personalized playlists, as well as a paid, ad-free version for $9.99 a month, which looks very similar to Spotify’s premium offering. Apple does not currently offer a free version of its music service.
AAPL has continued to rally after its quarterly results, reaching all-time highs on news that Warren Buffett upped Berkshire Hathaway Inc.’s (BRK.A) stake in the company by 75 million shares in the first three months of the year. Trading down about 0.3% on Thursday afternoon at $187.56, AAPL reflects a 10.8% gain year-to-date (YTD) and a 24.8% return over 12 months, outperforming the S&P 500‘s 1.9% increase and 15.5% growth over the same respective periods. (See also: Can Apple, Amazon, Pandora, Compete With Spotify?)