Apple is considering dropping the price on its streaming-music service, a new report says.
The tech giant is mulling a $2 price cut on Apple Music, bringing its single-user price down from $9.99 to $7.99 per month, Digital Music News is reporting, citing sources. The Apple Music family rate would be reduced to $12.99 from its current $14.99-per-month price, the report says. Students would continue to pay $4.99 per month.
The Apple Music price cut could come down during the holiday season, though it’s possible Apple delays it to 2017, the report claims. The Next Web earlier reported on the Digital Music News report.
According to Digital Music News, its sources are not “inside Apple,” but claim to have been “working closely” with the iPhone maker. Those sources added that the price cut is “under serious discussion,” but no decisions have been made.
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Apple Music is the company’s answer to popular streaming-music services like Spotify. For a monthly fee, users can stream millions of tracks, download them to their Apple products, and listen to both user-generated and curated playlists.
Since its release last year, Apple
has steadily grown the Apple Music user base. At last count in September, it had 17 million subscribers. During an earnings call last month, Apple CEO Tim Cook said that Apple Music is growing quickly and one of the chief reasons the company’s Services business is performing so well. He didn’t share updated subscriber numbers.
However, Apple Music’s success to this point, coupled with its leadership position in driving Apple’s Services business, might make some question the Digital Music News report. After all, Apple doesn’t appear to be having too much trouble attracting millions to its streaming-music service. And as the Services business is becoming one of its most important (it’s the second largest division inside Apple now), it’s hard to understand why Apple would reduce Apple Music’s price.
In general, price cuts are designed to boost demand for a product in hopes of attracting many more users and thus, more revenue. But at $9.99 per month, Apple Music is competitively priced. It’s one of the main drivers to Apple’s Services business, which is likely to reach the size of a Fortune 100 business next year with billions of dollars in revenue each quarter. Thus, it would seem to make little sense to cut pricing now.
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It’s also worth pointing out that Digital Music News’ sources are not actually working inside Apple. While the notoriously secretive company has admittedly become less secretive in the last few years, it doesn’t typically sharing pricing schemes with third-parties. Why it would change tack now is unknown.
The report also sounds similar to another from Digital Music News in May, in which the site cited music industry sources who had “close and active business relationships with Apple.” Those sources said Apple was planning to kill off iTunes music downloads as early as the end of 2018. An Apple spokesperson subsequently confirmed to Fortune, however, that the report was untrue, and Apple has no plans now to eliminate music downloads.
Therefore, this latest talk of an Apple Music price cut should be taken with the proverbial grain of salt. While it’s certainly possible Apple could cut Apple Music pricing, many signs point to the contrary.
Apple declined to comment on the report.
Update at 11:50 a.m. ET to note Apple declined comment.