• by Doug Chavez , Columnist, August 13, 2015

“I wish that I could be like the cool kids

’Cause all the cool kids, they seem to fit in

I wish that I could be like the cool kids”

Echosmith – Cool Kids

Apple Music debuted a little over a month ago as the newest cool kid on the music block. Just one month later, Apple announced the service had scooped up 11 million trial members.

Apple executives say they are thrilled about the user adoption so far. According to data released from Apple, two million users opted in for the more lucrative family plan, which costs $14.99 a month for up to six people. Individual users pay $9.99 a month. Apple Music subscribers get access to 30 million songs, human-curated playlists and a live radio station. Trial memberships are set to expire after three months. To be clear, 11 million users in just one month is a strong start. It also represents half of Spotify’s member base, and they launched nearly 10 years ago. But in relation to Apple’s overall base of 800 million iTunes users, it’s a low number and many in the market had expected a bigger number out of the gates. Observers in music, tech and entertainment have poured water on the 11 million, saying it’s “nothing to brag about.” I, on the other hand, am in the camp of saying “let’s wait and see.” Here’s why.

Apple skeptics seem to forget that Apple has 800 million iTunes accounts – with 800 million connected credit cards. And Apple owns more than just a music service. They own an entire platform and ecosystem platform for entertainment, ranging from over 500 million iPhones, 200 million iPads, laptops and family room-TVs connected with AppleTV. Using this massive installed based, Apple has the ability to push through marketing messages and promotions across all those screens at their discretion, and at little cost. Their competition can’t do this. Apple also has nearly $200 billion cash on hand, which gives them more runway to build their business over a timeline they desire. So, while Apple Music may be in sixth place behind Pandora, Spotify, iTunes Radio, SiriusXM and Deezer, they have a stronger market position to outlast the collective competition. 

Even with all the advantages Apple has in their corner, they won’t sit idle. They have ambitious plans to grow Apple Music. Rumors in the blogosphere are that Apple has an internal goal to reach 100 million paying subscribers in the next 24 months. While very aggressive, if they can achieve it, they will have doubled the subscribers of all their collective competition, (e.g., Pandora, Spotify, Rhapsody, SiriusXM) and have slightly more than 50 million paying customers. To do hit this goal, it will be important for Apple to expand their platform reach.

This fall, Apple is set to introduce Apple Music for Android. Expanding Apple Music across platforms opens Apple Music to universe of over a billion devices! The law of big numbers will work to Apple’s advantage. Converting just 2% of Android users, combined with iOS users, puts Apple Music in the top three music services – in a fraction of the time and marketing investment of their competitors. 

Despite their late entry into the space, Apple Music has a lot going for it. If Apple can differentiate the service from the pack and create enough compelling reasons for users to jump from the competition, they will have another business in the top three within a category. Eleven million is a lot of cool kids using the service but Apple will need a lot more to be the cool kid in class. I’m looking forward to watching things develop with Apple Music and from their competition in the coming months. Are you one of the 11 million trial members? If so, comment below and let us know what you think of Apple Music compared to the other services.