Spotify Premium (320kbps Ogg Vorbis) and Apple Music (256kbps AAC) also vary significantly in encoding efficiency: A test conducted by Audio Engineering Association in 2023 found that Spotify’s dynamic range (DR) in the 20Hz-16kHz band was 92dB, slightly less than Apple Music’s 95dB, but its transient response error (±0.03ms) was 42% smaller. However, Apple Music has been offering lossless audio quality (24bit/192kHz ALAC) since 2021 at a 1411kbps bit rate, with 100% coverage of the library, while Spotify’s HiFi Tier (FLAC) did not debut on a pilot until 2023 and only supports 19% of tracks. Priced at an additional $4.99 / month, the user penetration rate is only 7%.
Pricing and market share data reveal the competitive landscape: Spotify Premium will have 230 million global subscribers (31% market share) in 2024, far ahead of Apple Music’s 98 million (13% market share), However, due to the iOS ecosystem bundle (78% preinstalled), the latter reaches 45% of the US premium market (household income > $100,000 / year), ahead of Spotify’s 32%. On subscription price, Spotify offers $9.99/month (individual) ($4.99 student discount) and $15.99 (family plan, 6 individuals), while Apple Music offers $10.99 ($5.99 students) and $16.99 (families, 6 individuals). However, the Apple One bundle (along with iCloud and TV+) can reduce the cost per service to $7.50 / month and cut churn by 29%.
In content and library ecosystem, Apple Music has more than 100 million songs (with 100,000 exclusive material), while Spotify Premium has 80 million songs, but the latter attracts a mixed audience with 4 million podcasts (34% of the users’ listening time). For recommender algorithm performance, Spotify’s “Discover Weekly” playlist is 87% accurate (trained on 30 billion hours of user data), while Apple Music’s “For You” recommendation is driven by human tags edited (62% coverage), resulting in 18 percentage points lower satisfaction for cold starts. In terms of device compatibility, Spotify supports 3000+ third-party devices (e.g., PlayStation, Tesla), while Apple Music natively supports HomePod and AirPods spatial audio (head tracking error <0.5 degrees). But its Android client has a 15% failure rate (Spotify’s 6%).
Material difference between copyright cost and business model: Spotify Premium pays 65 per cent of revenues to record labels (58 per cent for Apple Music), but recovers some of its costs through advertising ($4.1bn of revenue annually), keeping gross margins at 26.5 per cent, below Apple Music’s 31.7 per cent, which has the advantage of hardware profit subsidies. From the anti-piracy technology perspective, Spotify’s DRM watermark detection is 99.2% (false seal rate 0.08%), while Apple Music is hardware-level T2 chip encryption (jailbroken device cracking possibility <0.01%). From user survey, Spotify’s cross-platform synergy NPS (net recommendation) is 45, higher than 32 of Apple Music, but the latter is 8.9/10 satisfaction among lossless users, higher than 7.6/10 of Spotify.
Industry events enhance competition: The EU’s Digital Markets Act of 2023 forces Apple to open up third-party payments, allowing Spotify Premium to circumvent the 30% “Apple tax” by charging directly, reducing iOS user acquisition costs by 19%; In the meantime, Apple Music restored its exclusive deal with Universal Music, locking up the release rights of superstar albums such as Taylor Swift, leading to a 14% quarter-on-quarter increase in subscriptions. In the long run, Spotify, with its pioneering podcast AD insertion technology (92% fill rate) and UGC playlist ecosystem (more than 4 billion users created), has been able to differentiate against Apple Music’s hard-soft strategy, narrowing the gap between their global streaming revenue share from 22% in 2020 to 9% in 2024.