Apple Subscriptions How Lightning Could Strike Twice For Apple

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            of US consumers would pay            the rate rising to            among            users

• If            of            entire iTunes users adopted, the            number of subscribers globally would            by            million

• A fifth            consumers and            of iOS users            upgrade their device in order            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            will cannibalize subscriptions:            of existing            subscribers consider themselves likely to           

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

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

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

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

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

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