Tuesday, Jul 10th 2018

Spotify vs. Apple

Update

Spotify’s lead over Apple’s music-streaming service in the US is narrowing, denting the air of invincibility around the recently IPO'd company.

While Spotify still holds a commanding lead globally, Apple’s faster growth rate in the world’s largest music market reflects its ability to push its services to owners of its devices, such as the iPhone.

Currently, Apple has about ~21M US subscribers while Spotify has ~22M, according to industry executives. A year ago, Spotify had about 17M US subscribers to Apple’s 13M, these people say.

How has Apple Music been able to grow faster than Spotify lately?

Spotify has always targeted music lovers, who tend to be younger and were early adopters of streaming. A lot of that base has been soaked up now, whereas Apple has a much wider customer base. They can get those more mainstream people very easily because Apple Music is already on their phone, and they already have their credit card info.

Daniel Ek, Spotify’s cofounder and chief executive, has brushed off concerns about Apple’s threat.

“We don’t see any meaningful impact of competition,” he said on a call with investors in May. “We don’t think that this is a winner takes all market.”

Daniel Ek

The jury's out on this competitive rivalry, but we think Apple Music will be a meaningful upside driver of AAPL's future sales, earnings and stock price.

As of this writing, AAPL was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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