“But that free tier could actually be a massive disadvantage for Spotify. Only about about 15% of Spotify’s 60 million users pay for the service, but their subscription fees make up around 90% of the company’s revenue,” Fitzpatrick reports. “If Apple converts enough of Spotify’s paid users, it could totally decimate Spotify’s business.”
Fitzpatrick reports, “But the biggest advantage Apple Music will have is even simpler than all that: It will be automatically installed when iPhone users upgrade to iOS 8.4 later this month, while iPhones sold with that software on board will have the app pre-installed.”
Read more in the full article here.
MacDailyNews Take: Apple Music has rendered Spotify’s future decidedly dimmer.
The best customers are those who pay. As demonstrated by years of data, form disparate sources, those paying customers are also significantly more likely to be iPhone owners than those who’ve settled for poor iPhone facsimiles. A healthy portion of these coveted customers will leave for Apple’s comprehensive offering which offers better family rates, more music, likely exclusives, and seamless integration across all Apple devices. It’ll even work with crappy Windows PCs and Android phones eventually (not that those are likely to be Spotify’s paying customers, but whatever, some of them will join Apple Music and maybe even graduate to Apple devices because of it).
Spotify could quickly be left with an unprofitable system, with a dwindling music library because they cannot afford to pay music royalties.
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