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Last updated: January 10, 2016 5:51 pm
Apple has passed 10m subscribers for its music streaming service, taking six months to hit a milestone that took its arch-rival Spotify six years to hit, say people familiar with the matter.
The rapid growth of Apple Music, which launched in more than 100 countries in June, raises the stakes in streaming, a form of distribution that offers hope to the music industry after more than a decade in the doldrums.
“It’s good news that Apple is making streaming work but it is also going to accelerate the decline of downloads,” said Mark Mulligan, music industry analyst with Midia Research. Apple was rapidly gaining on Spotify and at its current growth rate had “the potential to be the leading music subscription service sometime in 2017.”
Streaming is becoming the dominant form of digital music consumption and is growing rapidly as download sales decline. In the US, total sales of album downloads fell 9 per cent in 2014 while sales of individual tracks declined 12 per cent, according to Nielsen Music data. However, demand for streaming increased more than 50 per cent, with 164bn songs streamed.
Spotify and Apple have a clear lead over the competition. Deezer, the France-based streaming service, has more than 6.3m users and last October scrapped a €300m initial public offering that would have valued it at €1bn. Tidal, the artist-owned service led by hip hop artist Jay Z, reportedly hit 1m subscribers in the same month.
Spotify, which has a valuation of more than $8bn, has laid the groundwork for an initial public offering. By the time it hit 10m subscribers in 2014, the service had 40m active users in 56 markets.
The Swedish company’s growth has accelerated since 2014. In June it said it had reached 20m paying subscribers out of a total of more than 75m monthly listeners. That figure is likely to have increased further in the subsequent six months, during which time Spotify has been riding high in Apple’s App Store charts. This weekend, it was the third top-grossing app in the US App Store, suggesting that many iPhone users are already paying for Spotify subscriptions using their iTunes accounts.
Just before Christmas, The Beatles back-catalogue arrived on streaming services, bringing one of the last major holdouts to digital streaming. Last month Apple Music was made available on Sonos wireless speakers, its first partnership with a hi-fi maker.
Music is expected to become increasingly important to Apple’s 2016 device launches. The 9to5Mac blog reported last week that the company will ditch the 3.5mm headphone jack on the next generation iPhone, the standard on portable music players dating back to the original Sony Walkman in 1979. Instead digital headphones would connect to its Lightning port, which is also used for charging and data transfer to and from a PC. As well as providing higher-quality audio, the change could accelerate a growing move towards wireless headphones, which can already connect over Bluetooth to the iPhone and Apple Watch.
Apple declined to comment on rumoured changes to its headphone socket or its music streaming subscribers.
That would enable Apple to make the next iPhone even thinner or free up more space for other components such as batteries. At the same time, the company would be able to promote compatible headphones from its Beats subsidiary, which it acquired for $3bn in 2014 and formed the technical basis of its music subscription service.
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