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Apple Plays the Price Card with Apple Music – Who Would Have Thought?

by Michael Goodman | Aug 06, 2015

With 11 million subscribers signing-up to trial Apple Music in its first month of availability, Apple’s new subscription music service is off to a strong start. The challenge will be to convert these trial subscribers into paid subscribers. One way Apple intends to accomplish this is by ensuring Apple Music is price competitive.

Being price competitive is not usually high on Apple’s list of priorities; however, Apple is taking a decidedly different approach with Apple Music. Typically when Apple launches a new iPhone it does not significantly differentiate pricing between developed markets and emerging markets. Apple Music, however, is late to the market, launching into a crowded marketplace which includes industry leader Spotify who has over 20 million paying subscribers. As a result, Apple is taking a decidedly different approach to pricing Apple Music.

In the U.S., Apple Music costs $10 a month for an individual account and $15 a month for a family account that can be shared with up to six people. In comparison, Apple Music is being priced significantly lower in emerging markets. In India, the monthly fee is $2 for individuals and $3 for a family plan. In Brazil, Indonesia, and Thailand, it is $5 and $7 respectively; and in in Hong Kong it is $6 and $10 respectively. In comparison, Brazil and Hong Kong are also served by Spotify. Apple would almost match Spotify in Brazil for an individual subscription (Spotify is $4.30 per month), and undercut Spotify in Hong Kong (Spotify is $6.20 per month). Apple’s family package is competitive everywhere.

This county-by-county pricing for Apple Music is indicative of a level of sensitivity to local market conditions not typically seen by Apple. While Spotify might not be available in many of these emerging markets, local services catering to users with little discretionary income but a big appetite for music do. If Apple were to charge what it does in the U.S. and other developed markets it “goose would be cooked” in the emerging markets. While this does not mean that Apple Music will succeed it does show that it is not tone deaf to local market conditions and that it is open to doing what it needs to improve its chance of success.

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