Analysis

Apple Music: ‘millions’ of listeners but also FTC interest


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Apple announced its latest quarterly results last night, and while the company resisted the temptation to give hard stats on the performance of its new Apple Music service, CEO Tim Cook did throw out a few nuggets.

“Millions and millions of customers are already experiencing the new service using the three-month trial period, and the numbers are growing substantially every day,” Cook told analysts. “Over 15,000 artists have signed up to post on Connect, where we are already seeing great original content… Millions of listeners around the world are tuning in to Beats 1.”

So yes, quite vague, and the priorities of the analysts on the call meant none of them probed further: with the three-month free trial still underway, Apple Music isn’t having any impact on the company’s bottom line, even with the company’s pre-launch u-turn on royalty payments during the trial.

So we were left with Cook hailing “a renewed sense of excitement around music, which we love and expect to continue as Apple Music gets traction with customers”. Something else that’s continuing, however, is the interest of the US Federal Trade Commission (FTC) in Apple’s music business.

The FTC has been sniffing around this issue for a few months now, egged on by Spotify and other rivals. Now The Verge, which has been well-briefed throughout the informal investigation, reports that it has become a formal one – complete with subpoenas issued to other streaming music services.

As expected, the focus appears to be the 30% cut that Apple takes of in-app subscriptions through its App Store, forcing rivals to raise their prices while barring them from promoting the cheaper subscriptions available from their websites.

The process rumbles on, but what about those financials? Apple’s quarterly revenues rose 32.6% year-on-year to $49.6bn as the company posted a quarterly profit of $10.7bn, up from $7.7bn a year ago.

Apple sold 47.5m iPhones last quarter – up 35% – although that missed analyst forecasts of 50m sales, sending the company’s share price tumbling. Apple also sold 10.9m iPads, 4.7m Macs, and ended the quarter with $202.8bn cash on hand.

Apple Watch? The company avoided giving a hard stat, but reading between the lines of the quarterly figures and comments from Cook, TechCrunch’s calculation of 2m Watch sales appears to be a decent estimate.

Stuart Dredge

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