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Apple Music hits a 'triple' with 6.5 million paying subscribers, analyst says

The race for streaming music dominance appears to have begun in earnest now that Apple has revealed how many customers are paying for its new service.

Apple Music has signed up 6.5 million paying subscribers less than four months after its launch, about a third of the number who pay for 7-year-old market leader Spotify, according to Apple Chief Executive Tim Cook. An additional 8.5 million people are using the free 90-day trial version of Apple Music, bringing its total current user count to 15 million.

Cook announced the new figures at an industry conference in Laguna Beach, the first time the tech giant has given user numbers since the first wave of introductory free trial subscriptions started to expire at the end of September. Apple Music launched June 30 in more than 100 countries.

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The music business had been eagerly anticipating data from Apple Music, which many analysts hoped would be the game-changer that brought music subscriptions into the mainstream. But many early adopters voiced concerns about bugs in the app, the complexity of its user interface, and the lack of a discernible difference from rival services.

It's unclear how many of the 6.5 million subscribers will stick with the service after Apple starts charging them, and analyst opinions were mixed on what kind of success the figures indicate. But several observers said the numbers met or exceeded their expectations.

FBR & Co. analyst Daniel Ives said Apple Music is off to a "solid start" and said he would "characterize this initial stage of the launch as a 'triple' in the streaming ballgame." At this pace, he added, Apple could hit roughly 20 million subscribers in a matter of 12 months.

"A year from now, if Apple keeps going on this trajectory, Spotify's going to be looking over their shoulder," Ives said.

Not surprisingly, Apple's Cook was upbeat about the early numbers. The Cupertino, Calif.-based tech giant last year paid $3 billion for Beats, the music service and headphone maker on which Apple Music is based.

"I'm really happy about it," Cook said late Monday during remarks at the WSJDLive conference hosted by the Wall Street Journal.

Expectations were high for Apple Music. The app came installed on any iPhone that upgraded to iOS 8.4 and also is preinstalled on all newer iPhones sold in stores. In the first quarter of 2015, the company sold 74.5 million iPhones.

Before Apple Music debuted, some industry insiders expected Apple's wide reach among consumers, marketing prowess and huge cash stockpile would propel the service past Spotify within months. But observers now say those projections set the bar unrealistically high.

"If we weren't talking about Apple, we'd be jumping for joy," said Russ Crupnick, managing partner of research firm MusicWatch. "Getting people to understand the whole concept of paying a subscription is a marathon."

Still, Crupnick acknowledged that fewer people had tried the service than he expected.

Spotify, for its part, is not standing idly by.

The Swedish company's CEO, Daniel Ek, said at an industry event in Canada last month that Spotify was getting a boost from all the attention Apple was bringing to the online music space.

Spotify, valued at more than $8 billion, has built a huge audience with a so-called freemium model that attracts users with a limited ad-based version, and tries to convert them into paying users. It has added new perks, including weekly customized playlists and a feature for runners, and has experimented with promotional pricing to get people hooked.

Both Apple and Spotify charge individual users $9.99 a month for unlimited access to their vast song libraries.

Apple Music boasts access to 30 million tracks and a bevy of expert-created playlists. Its other features include a 24-hour radio station called Beats 1 and a social component that allows artists to share new videos and songs.

Some streaming music rivals don't release user statistics, but Spotify is thought to have a considerable lead on the competition with 20 million subscribers and 55 million who regularly use the free version that makes money from advertising. French service Deezer, which is not widely available in the United States, has 6 million subscribers worldwide. Other significant players include Google Play Music, Amazon's Prime Music and Rdio.

Even Jay Z's Tidal, which stumbled soon after its launch this year, may be getting some traction. The rapper and mogul announced the milestone in a tweet last month, saying that "Tidal is platinum."

That fledgling service has suffered a number of public relations mishaps since it debuted in March. During a recent court appearance, Jay Z reportedly had to be reminded that the service was among his many businesses, despite the fact that he paid $56 million for it.

Analysts have been looking to Apple to ramp up its marketing efforts. During the Emmys telecast in September, the company debuted a star-studded ad in which Kerry Washington of "Scandal," music legend Mary J. Blige and Taraji P. Henson of "Empire" dance to an Apple Music playlist.

Other Apple Music marketing efforts, such as the conspicuous billboard campaign, have emphasized the Apple Music brand without telling consumers much about what they're getting from the service. Mark Mulligan, a music industry analyst at research firm Midia, said Apple needs more advertising that calls consumers to action.

"More people need to be persuaded that this is something they want to do," Mulligan said.

ryan.faughnder@latimes.com

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