The music streaming system is expected to drive Services growth throughout that time.
The strong and steady Apple Music growth rate is expected to play an important role over the next three years, says an analyst. It will be among the top driving factor for sending services revenue upward. That said, it may also reduce overall margins, said the analyst.
The figures presented by the analyst were printed into a note received by his investors.
The data was put forward in a note to investors. Macquarie Capital’s Ben Schachter wrote the note. He predicts that the Apple Music growth comes with a margin of about 15 percent. This isn’t a huge margin, but it is explained by the size of the rates paid out to the artists and labels.
While Spotify currently has 24 percent margins, its methods have been called into question. For instance, that company is currently facing a number of lawsuits in the area of artist compensation. Therefore, it is not out of the question that Spotify’s own margins may fall during the three years of Schachter’s forecast.
Apple Music growth has also occurred in its subscriber numbers, which have risen tremendously recently.
Since September 2017, Apple Music subscriber numbers have risen by 10 million. This brought the total number of subscribers to 40 million by the stat of this month. Schacther’s forecast represents a steady extension of that growth trend. It looks as though the Schachther’s forecast is based on about the current subscription rate. That prediction doesn’t appear to include any more striking subscription growth rate increases.
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This solid base of subscribers hands Apple a great deal of potential for its future in services. It may link the new services to the Apple Music subscriptions, as well, as it has been making several moves in the area of video.
Apple’s video budget growth is predicted to rise by a tremendous 54 percent per year from now through 2022, to a total as high as $1 billion.
The Apple Music growth rate hadn’t spent any real time in the spotlight until 2016 when the company’s CEO, Tim Cook, placed it there. He stated that that specific segment of the company, on its own, would be reach the size of a Fortune 100 company by the end of last year. It reached that milestone on August 1, 2017, placing it ahead of Facebook, in 97th place.