MusicWatch: With a Possible Relaunch of iTunes Radio Streaming Service, Apple Has Some Catching Up to Do

In a search for more users, Apple is rumored to revamp its iTunes Radio service for its Worldwide Developer Conference next week

HUNTINGTON, N.Y.-- With Apple rumored to be planning a major revamp to its iTunes Radio music streaming service at the company’s Worldwide Developer Conference next week, new data from MusicWatch, a company providing consumer research for the music industry, reveals that the company has some catching up to do. iTunes Radio is the sixth most popular service for music streaming among U.S. Internet users, age 13 and older. However iTunes is more at parity among iPhone users.

  “iTunes, which consistently dominates the market for paid digital downloads, has more competition in the music streaming category and has had less success than other streaming services in attracting an audience,” said Russ Crupnick, founder and managing partner of MusicWatch. “If iTunes Radio weren’t an Apple service, we’d be applauding its progress, but with nearly 70 percent of all U.S. Internet users now streaming music, Apple has an opportunity to become more competitive in that market.”

Based on MusicWatch’s Annual Music Study, Apple’s current iTunes Radio service accounts for just 5 percent of the listening hours among the major streaming services, which includes Pandora, Spotify, iHeart Radio and YouTube. In fact, three out of four iTunes Radio users also stream music from YouTube; and nearly the same proportion of iTunes Radio users also listen to Pandora.

The new Apple streaming service is rumored to use a paid subscription model. MusicWatch estimates that 18 million streamers, out of the estimated 135 million music streamers in the United States, either paid directly or shared a paid account for a subscription service in the past year.

“Getting consumers to pay for subscriptions has been challenging, but Apple has some advantages, with a database of customers, a healthy gift-card business and the potential of Apple Pay,” said Crupnick. “Based on the success of iTunes Music, iPod, iPhone and iPad, Apple is superb at teaching customers the benefits of new technology. When it comes to streaming, however, Apple needs to offer a vision of why a paid subscription makes sense, in a world already cluttered with free options.”