Spotify to Apple: Come and get us.
When Apple announced its new streaming service during its annual World Wide Developer's Conference on Monday, the company had Spotify in its sights. The Apple Music introduction included jabs about paying artists the rates they deserve and treating music like art instead of digital bits. But Spotify isn't about to take any of Apple's initial shots lying down.
On Wednesday, Spotify hit back with some impressive statistics about its growth. Spotify says it now has more than 20 million paying subscribers and 75 million active users. That's double the number of paying users Spotify had in May 2014 when it hit the 10 million subscriber mark. As for paying out royalties, Spotify says it has paid out a grand total of $3 billion to artists, and $300 million of that was in the first three months of 2015.
Royalty payments from Spotify and other streaming services were put in the spotlight in late 2014 after Taylor Swift famously pulled her music off of Spotify. In an interview with Time shortly thereafter, Swift blamed Spotify and other services with free, ad-supported tiers for the devaluing of music.
Like the Beats Music service before it, Apple Music will not have a free tier.
In its latest announcement, Spotify defended its free tier, arguing there's always been free music on the radio. Similar to tuning in to your favorite FM station, Spotify's free tier features are limited and very radio-like on mobile devices. Spotify also said that 80 percent of its paid users began as free users, emphasizing the importance of offering a free tier.
Why this matters: Apple Music is easily the biggest competitive threat to Spotify and other streaming services such as Google Play Music All Access, Rdio, and Xbox Music Pass. When it launches on June 30, Apple Music will appear in front of a massive iTunes user base across iOS, OS X, and Windows, with Android and Apple TV users to follow this fall. Even though iTunes music sales have been in decline, the attraction of putting your personal music catalog together with a new streaming service is likely to earn a big following. Beyond the usual catalog of 30 million songs, Apple Music offers a number of interesting features, including the live radio station Beats 1, Connect (which is similar to Ping, but reborn in a context that makes more sense), and Siri integration on iOS.
Beyond the power of the crowd
Impressive growth numbers alone won't be enough to fend off Apple Music if the service grows quickly. In May, Spotify announced it would expand beyond music by adding podcasts and video. The company also recently closed a $526 million round of funding to help the company do battle with its new rival, according to The Wall Street Journal.
Spotify also wants to match Apple Music's family plan pricing, according to The Verge. Apple Music will charge $15 per month for up to six users, while Spotify charges $30 for a family of five--there is no option to add a sixth.
Regardless of whether you stick with Spotify or switch to Apple Music, having two rival services competing for new subscribers and creating engaging new features will inevitably benefit users of both services.