Apple Music 1 Year After Launch -- A Solid Start, But Not a Threat

Image source: Apple.

It's been one year since Apple Music, Apple's attempt at an Internet-based, Spotify-esque music service, has debuted. Here's a look at how the music service has fared during its first year, and how it holds up against other popular streaming music services.

15 million users strong

At Apple's June 13 Worldwide Developers Conference, or WWDC, the company said Apple Music had reached 15 million paid subscribers -- an impressive number considering Apple Music was just under a year old at the time.

For perspective, compare this number of paid subscribers to Spotify and Pandora's paying subscriber counts:

Pandora has just 3.9 million paying subscribers -- and this number isn't growing fast. The company's paid subscriber count in its most recent quarter was up just 4% compared to the year-ago quarter.

Image source: The Motley Fool.

As the world's largest online streaming music service, Spotify hit 30 million paying subscribers in March -- about double the size of Apple Music today. While the service has been around longer than Apple Music, it's worth noting Spotify only had 10 million subscribers in 2014. Spotify, therefore, has continued to grow rapidly even as Apple steps up its streaming music service.

Comparing Apple Music's size to Pandora and Spotify, it's safe to say that Apple Music is undoubtedly already a major player in the streaming music service.

Better than it looks

But investors shouldn't be too quick to pat Apple on the back for its achievement of hitting 15 million paying subscribers in less than a year. Here's why:

First, Apple had a huge head start when it launched Apple Music. Not only did Apple have about 800 million iTunes accounts with credit card information when it launched its subscription-based streaming music service, but it had launched iTunes Radio two years earlier, or about 3 years ago from today. While iTunes Radio was a free service, it was, more or less, a foundation for Apple Music -- and it was the first music platform from Apple that began to look a bit like Pandora and Spotify.

Second, Apple has an edge over Pandora and Spotify because of its huge market share in smartphone sales. In the first quarter of 2016, iPhones accounted for 15% of all smartphone sales globally, according to IDC. Delivering Apple Music as a pre-installed app on all iPhones, iPhone customers are more inclined to use Apple Music. Further, Apple Music works seamlessly with iTunes, which is also integrated deeply into the iPhone's iOS ecosystem.

With these advantages in mind, Apple Music may not be the game-changer its numbers suggest it is.

The Apple Music boon

Notably, Apple Music could get a boost this fall. Not only will the company's refresh to its flagship iPhone this fall likely drive new subscribers to Apple Music, but Apple announced a redesigned Apple Music app, aimed for a fall launch, at WWDC this summer.

Apple Music overhaul. Image source: Apple.

The redesign addresses some of the key complaints about Apple Music, particularly concerning its confusing user experience.

"Apple Music has an all-new design, bringing greater clarity and simplicity to every aspect of the experience," Apple said in a press release. "It uses a new design language that allows the music to become the hero and a new structure that makes it easy to navigate and discover new music."

While Apple Music could get a boost from a new iPhone and a redesigned app, it's not looking like the service is set to drive out the entrenched Spotify. And even Pandora looks like it will continue to attract new users, as its user base is growing even after the launch of Apple Music.

Apple Music's rise shows the tech giant is serious. But it also shows there's room for more than one success in the fast-growing streaming music space.

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Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Pandora Media. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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