Apple Subscriptions How Lightning Could Strike Twice For Apple

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The 20,000 Foot View

Apple’s        renaissance all started with music, with the iPod.  With the succession of successful products that followed, Apple perfected its early follower model, waiting for others to establish markets and for them to bleed out on the cutting edge of innovation before sweeping in to dominate.  Apple left it late for subscriptions but the odds are still in favour of its repeating the cycle.  Demand for a music subscription service is high among Apple’s users and streaming incumbents will not relish the arrival of what remains the world’s biggest digital music service.  Apple came out of nowhere to become the dominant download store, now it may do just the same for subscriptions.

Key Findings

• Nearly a fifth of US consumers would pay        with the rate rising to        among iOS users

• If        of Apple’s entire iTunes users adopted, the total number of subscribers globally would grow by        million

• A fifth of consumers and        of iOS users would upgrade their device in order to get a discounted        subscription rate

       consider themselves likely to buy a special edition iPhone or iPad that included        months of subscription access, rising to        of iOS users

• Near term Apple will cannibalize subscriptions:        of existing music subscribers consider themselves likely to subscribe 

• Long term opportunity exists with streaming newbies - while only        of downloaders are interested they represent        of all the interested consumers

• Apple’s streaming competitors will need to increasingly compete around, not with Apple

• Apple’s anticipated        price point will trigger deflation down the pricing ladder, opening up innovation opportunities

• Apple could be the first genuine music platform, though there are multiple risk factors it must overcome first

• A high tide may raise all boats with streaming incumbents benefiting from Apple’s extensive marketing efforts

Companies mentioned in this report: Apple, Spotify, Samsung, Nokia, Beyond Oblivion, Rhapsody, Rdio