Report: Apple Music To Overtake Spotify In U-S Subscribers

Months before its hotly anticipated public stock offering, Spotify AB’s lead in music streaming is shrinking, at least in the U.S.

According to The Wall Street Journal, Apple Inc.’s Apple Music is adding subscriber accounts in the U.S. at a higher rate than Spotify, and is on track to pass the No. 1 streaming service this summer, according to people in the record business familiar with figures reported by the two services.

Spotify is widely considered the dominant force in the streaming world, with Apple at a distant second. To be sure, Spotify is larger globally and continues to grow slightly faster. But that the No. 2 streaming service is quietly gaining ground in the largest music-subscription market in the world signals Spotify now has significant competition.

Wall Street Journal graphic

The introduction of streaming services has fueled a recovery for the record industry following years of declines amid plummeting sales of CDs and, more recently, downloads. Streaming customers pay a flat monthly fee or listen to ads in exchange for unlimited access to vast music catalogs; with downloads, consumers pay for individual songs or albums once and own them permanently. Paid subscriptions, up 61%, were the largest source of record-company revenue in the U.S. in the first half of 2017, according to the Recording Industry Association of America.

But music streaming has yet to prove itself as a viable business as the tech companies operating these services struggle to make them profitable. Active users and paid subscribers are the most closely watched metrics as these services grow.

Apple’s subscriber-account base in the U.S. has been growing about 5% monthly, versus Spotify’s 2% clip, according to the people familiar with the numbers. Assuming those growth rates continue, Apple will overtake Spotify in accounts this summer.

One question lingering in the industry is what metrics Spotify will have to disclose once it becomes a publicly traded company. The service has periodically released global subscriber totals and just last month touted a new high of 70 million.  Apple Music told WSJ it now has 36 million, up from the 30 million it last reported in September.