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

| Dave Hamilton's Blog

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.

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I like this theory. It makes a lot of sense to me. There are just not that many people willing to pay $120/year for music access, with the spectre of losing all their music when they stop paying. We’re too conditioned to think that when we buy a song, we get to play it forever.

That said, if you make the service cheaper, it becomes what Apple has already positioned it as: not THE way you listen to music, but A way to listen to music. I’d pay $2-3/month without too much hesitation for Apple Music, because that’s about how much value I’d get out of it. Listening to the occasional song to find out what the fuss is about, using Siri to show me the hits of past years, etc. That’s fun and useful. But it’s not $120/year useful to me.

I’d also be fine with a tiered/metered service that gave me only, say, 100 song plays for that $2 per month. That would be enough and perhaps give the labels a reasonable limit they could feel comfortable with at the lower price point.

But it’s tough to see how the music industry would countenance even lower prices. Artists already feel like they’re being ripped off at $10/month. Then again, has there ever been a period when artists *didn’t* feel like they were being ripped off?


I feel the same way. Most of what I like isn’t available on streaming so I used iTunes Match for a while. Then I hit the 25K “song” limit and that was that. Hopefully that will be fixed before too long (Amazon has done 250K at the same price for years now, so I don’t know what’s holding Apple up).


So here in Global North the average family size is 6?  Or does Apple define ‘family’ differently?


Yes, KurtG, isnt the typical forum user managing the it-equipment and accounts for the spouse, two children and an old parent or two? My family account cover 5 persons, and my mother now has access to the occasional new song she’d like to listen to.

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