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Apple’s attempt to stop Spotify has been a spectacular failure

Published Dec 8th, 2015 11:40AM EST
Apple Music Vs. Spotify Revenue

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Perhaps the biggest revenue success story in the U.S. app market this year has been the stunning rise of Spotify in the iPhone revenue charts. This is all the more remarkable considering that Spotify has been facing direct competition from some of the biggest names in the music and software businesses in 2015.

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Last January, Spotify was still bouncing between No. 7 and No. 9 on the U.S. iPhone app revenue chart. On December 7th, it hit a jaw-dropping No. 2 position, elbowing out Game of War, the blockbuster strategy app that spends more than $100 million a year on TV advertising alone. This is a big deal indeed because the No. 2 app in America typically makes three times more revenue than the No. 5 app and five times more than No. 8 app.

In March, Jay Z launched Tidal, the music streaming app backed by superstars like Beyoncé and Nicki Minaj. In July, Apple rolled out its highly anticipated Apple Music streaming service. Yet nothing is slowing down the Swedish steamroller. Monthly revenues of Spotify are a subject of intense industry speculation right now, but some Nordic industry sources believe they may now be poised to top $25 million in the United States alone in December.

A year ago it seemed that Apple would have all the time in the world to develop its own music service, building on the extremely expensive Beats acquisition. But time may be running out as Stockholm’s rampant unicorn has eviscerated most of its streaming competition and is poised to become a de facto global standard. Has Apple’s management been too distracted by watches, cars and other minutiae while allowing the digital music market to slip away from its grasp?

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.