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Apple Music Adds 2M Subscribers in Two Months, Analyst Predicts Service to Grow 40% Per Year

Apple Music Adds 2M Subscribers in Two Months, Analyst Predicts Service to Grow 40% Per Year

Earlier this month, a leaked internal email revealed Apple Music had hit the 40 million subscriber level, up from the 38 million mark that had been reached just 2 weeks earlier. Now, one industry analyst see this as an indication that Apple’s music streaming service will grow at a rate of 40% per year.

WSJ via 9to5Mac:

Ben Schachter of Macquarie Capital estimates that Apple Music will average 40% annual growth over the next three years, making it the fastest-growing part of the company’s services segment. Apple is expected to report total service revenue of $8.3 billion for the fiscal second quarter being reported on May 1—up 18% on year.

Despite the healthy projected growth rate, Schachter says Apple Music is likely to be one of Apple’s least-profitable businesses.

The rub, of course, is that music streaming isn’t a terribly profitable business, due mostly to the royalties streamers must pay to labels and artists. Mr. Schachter estimates that Apple Music commands a gross margin of around 15%. That is actually lower than the 24% that Spotify projects for this year.

While Spotify continues to be the music streaming industry leader, the service has begun to look over its virtual shoulder as Apple Music’s subscriber numbers continue to grow at a healthy rate.

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