Apple Music's 6.5MM Customers Aren't All Paying $10 Per Month

Monday night at the WSJD conference Tim Cook announced that Apple Music currently has 6.5 million people in the "paid category." Many folks are comparing that to Spotify's 20 million paying subscribers. Opinions on that comparison are all over the map, as you might imagine.

One thing that seems to be missing is data showing how much each of of these streaming customers is paying. At Spotify, the individual rate for US customers is US$9.99 per month. Spotify offers "family" pricing where additional users get a 50% discount. This means Spotify users pay somewhere between $6 and $10 per account.

For Apple, though, the math is a little bit different: Apple Music offers a flat-rate family plan at $14.99 per month allowing up to 6 total users on one account. That quickly dilutes the price down to somewhere between $2.50 and $5 per month per user.

Apple Music's Family Plan is perhaps the service's biggest secret weapon. It's been shared with me that industry executives know $10 per month per user is too much – $3-$5/month is where it needs to be – but they're not yet ready to allow the advertised price to be lowered. Apple Music's family plan gives the industry the ability to test what it looks like to have customers in that magic $3-$5/month range without actually advertising that price anywhere. That, combined with Apple's tight restrictions on what constitutes a Family (one must share App Store purchase ability, too) is part of what convinced the labels to allow this test.

This seems to be the first step on a carefully-scripted path where, in the end, streaming will thrive at the $3-$5/month/user rate. Spotify will eventually transition to that, as well, as a "reaction" to Apple's current pricing. Remember, Spotify is partly-owned by the labels themselves, so having an at-arms-length test happening with another popular streaming service in Apple Music is a great way to sort out their plans for the future.

I've made it no secret that I emotionally support all conspiracy theories, and I believe there's one here that I can intellectually support, too. The music industry is well-aware that change is necessary. Technology has always dictated what that change will be and the existence of streaming music is no different. The question that's being tested here is, "how low do we have to go?" I think they've laid out a path that will let them answer this question without having to actually ask.