Apple’s dominance in the streaming audio market is facing big challenges, especially from Spotify. Despite Apple’s early entry into digital music distribution and its association with the origins of podcasting, Spotify has managed to achieve comparable popularity among Apple device users.
Apple Music, a paid subscription service, is used by 50% of Apple customers. However, Spotify’s combined free and paid options have reached similar levels of penetration. 51% of Apple customers use Spotify’s free tier, and 30% subscribe to Spotify Premium. This says that Spotify has successfully established itself as a major player in the streaming music market, even among Apple’s user base.
The competition in the podcast space is equally intense. 41% of Apple customers use Apple Podcasts, and 38% use Spotify for podcasts. Spotify’s rapid growth in this area is particularly noteworthy, considering it only launched its podcast service in 2018, much later than Apple.
The two companies employ different strategies.
- Apple offers Apple Music as a paid subscription only and provides podcasts for free through the Podcast app, taking a share of fees charged by podcast publishers.
- Spotify offers both free and paid subscriptions, including music and podcasts in both tiers and gives exclusive content and an ad-free experience for Premium subscribers.
Many Apple customers use both Apple Music and Spotify’s free tier. However, few pay for both Apple Music and Spotify Premium due to service redundancy.
Apple’s Services segment, including Apple Music, is highly profitable, but the company faces strong competition from specialized providers like Spotify. This competition is particularly evident in the streaming audio market, where Spotify has managed to achieve similar penetration rates among Apple device users despite Apple’s native advantage.
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