Apple (NASDAQ:) has hired Warner Music Group executive Jeff Bronikowski as the global head of strategic music initiatives, per a recent Reuters report.
Notably, Apple Music currently offers more than 60 million songs with world class music experts and tastemakers curating thousands of playlists and daily selections in 115 countries
Music Streaming Growth Prospects Aplenty
Per a Statista report, the music streaming market is expected to generate revenues of $12.4 billion in 2020. The figure is expected to rise to $15.5 billion at a CAGR of 5.7% between 2020 and 2024. Further, user penetration in 2020 is expected to be 14.6% and increase up to 6.5% by 2024.
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
Considering the growth trajectory, on Feb 6, Warner Music Group, the third-largest music company behind Universal Music and Sony Music, filed documentation to go public, under the proposed ticker, WMG.
While Spotify (NYSE:) and Apple Music dominate the music streaming industry, the presence of other players like Amazon’s (NASDAQ:) Music services, Alphabet (NASDAQ:) YouTube Music, ByteDance, Deezer, iHeartMedia, Sirius XM (NASDAQ:) has intensified competition in the rapidly growing music streaming space (subscription as well as Ad-based).
Spotify Dominates Music Streaming Space, Apple Trails
Spotify is benefiting from premium subscriber growth. Its solid focus on the personalization of playlists enhances the music experience for users.
Moreover, robust playlists are helping the company rapidly convert free listeners to paid subscribers. In fourth-quarter fiscal 2019, the audio streaming company reported 124 million premium subscribers globally, up 29% year over year.
Notably, Spotify is set to purchase sports and lifestyle company The Ringer, for $200 million upfront with another $50 million later, per a Bloomberg report. The Ringer will bring to Spotify its industry-leading sports and entertainment team, podcast catalog and website, expanding Spotify’s offerings and reach.
Can Apple Music Overtake?
Apple is focusing on services such as Apple Music, which debuted in 2015 at $9.99/month to bolster its sales with paid monthly and/or yearly subscriptions. Services (13.8% of sales) revenues grew 16.9% from the year-ago quarter to $12.72 billion in first-quarter fiscal 2020.
Apple reported more than 480 million paid subscribers across its Services portfolio, up 30 million sequentially and 120 million year over year. Third-party subscription revenues increased 40% year over year.
Meanwhile, Apple has been gaining steam in the music streaming space with expansion of Apple Music subscriber base. In 2019, Apple Music received new time-synced lyrics feature, which has been used by 50% of listeners on iOS 13 so far.
Further, its availability on Google Play is a major positive. Apple Music’s availability on Amazon Echo devices is expected to expand the iPhone maker’s footprint further in the music streaming space. Additionally, the company is gaining from its tie-up with Verizon (NYSE:).
Zacks Rank
Apple currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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