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Apple Music has a stickiness problem

Gregg Keizer | Aug. 21, 2015
Fewer than half of the U.S. iOS device owners who've tried the streaming service still use it; Apple disputes the low number.

"That was a bit odd for something that you wouldn't pay for immediately," Dawson said.

Apple took that approach for good reason, Dawson continued, noting that the company linked the Apple Music trial to the customer's credit card already on file with iTunes. By making those who signed up for the trial later opt out to avoid charges to their cards -- when the three months ends, the $9.99 (individual account) or $14.99 (family plan) fees automatically begin -- Apple will certainly boost the retention rate.

"That's a higher barrier for a trial," Dawson said of the get-the-card-up-front approach, but added that getting payment information was usually the whole reason for a freebie.

In a way, Crupnick agreed. When asked to square the circle between two conflicting survey results -- 64% told MusicWatch that they were extremely or very likely to subscribe, even as 61% said they'd already turned off the auto-renewal option in iTunes -- Crupnick said that users were simply being cautious.

"I have a theory on that," said Crupnick. "From Day 1 there were a lot of people talking about how to turn this auto-renewal off. I think a lot of people turned it off even before experiencing the service."

In that scenario, many of those who had disabled automatic renewal would end up paying at the end of their trials.

Just as important to Apple Music's fortunes, though, has been its apparent inability to become consumers' first choice for listening. By MusicWatch's poll, just 48% of those in the U.S. who had tried the service were still using it. That signaled a significant churn rate, which atop the relatively small portion of iOS owners who give Apple Music a shot, speaks to problems in unseating rivals like Spotify, something many analysts simply assumed would occur.

But Crupnick preferred to see the sunny side. "If you look at the penetration of iOS in the U.S., there's a lot more opportunity for Apple," he said as he also stressed the need to put Apple Music in market context. If Apple pulled the bulk of its current U.S. users of Apple Music onto the paid rolls, it would instantly double the 10 million who now pay for a streaming service here.

"It's where you set the bar. If you were expecting a large percentage of all iOS owners, well then, it's a disappointment. But if Apple Music doubles the number of paid people, it's a home run," said Crupnick.

 

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