Apple Music Is Turning Apple into a Media Giant

2 minute read
| Analysis

No sooner did Apple’s earnings for the March quarter come out than the rumor mill kicked back into gear promising a variety of hardware. This news cycle ignored a slow, but significant, shift happening in Apple, driven by Apple Music.

Yes, Apple remains a firm that makes highly popular hardware. People want iPhones and MacBook Pros and Watches. However, it now has a media offering in the form of Apple Music that is becoming ever more important.

Apple Music

Apple Music subscriber numbers soaring

CEO Tim Cook hinted at this shift in an analyst earnings call after the Q2 results. He said the company had achieved:

…double-digit revenue growth from Apple Music subscriptions and iCloud storage and overall very strong growth in the total number of paid subscriptions for our own services and the third-party content we offer on our stores. Paid subscriptions [of all Apple and third party subscriptions going through Apple] now exceed 165 million.

This is not a fluke. In fact, it’s becoming a trend. If we hone in on what we know about Apple Music specifically, we start to see the effect.

In February 2016 Eddy Cue revealed that Apple Music had hit 11m subscribers. By the time Apple came to announce its quarterly earnings 2 months later that number had risen to 13 million. By December 2016 it had hit 20 million, and in February this year Mr. Cue bragged that the number was “well past 20 million.” (Although not so “well past” 20 million that he announced a specific number, you will note…)

Becoming a media mogul

Revenue from services, including all the media offerings, has been at around $7 billion in the first two-quarters for 2017. Q2 2017 results were up about $2 billion from the same time last year. Using company reports and RBC Market estimates, AppleInsider concluded that Apple Music accounted for 10% of this revenue, and iTunes made up a further 22%.

By comparison, Time Warner’s revenue for the first quarter of 2017 was $7.7 billion. Disney’s was $14.78 billion. Not every cent of income from these firms will be generated via media. In the case of Disney they have a variety of other revenue sources, including theme parks, cruises, and merchandizing. Time Warner is somewhat diversified too, although to a far lesser extent than Disney.

While small compared to Apple’s total revenues, the company’s media services—and Apple Music in particular—are generating serious revenue when compared to the media-only giants. Having become dominant as the firm that made the best-looking hardware, Apple is competing on the same playing field as some of the biggest media brands on the planet.

One Comment Add a comment

  1. Scott B in DC

    My guess is an iPod geared strictly to Apple Music. It will stream anywhere and the subscription price will include data. Oh, and it will be USB pluggable to attach to cars that have USB inputs.

    Now if I’m right youse guys should buy me one!! 🙂

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