The Power of Defaults: What Apple Music's Market Share Domination Over Spotify in the U.S. Means
If there is one thing behavioural research has repeatedly shown, it's that users rarely change their default settings. Whether be it an Android smartphone or an iPhone, or a Mac or a Windows PC, or any service you sign up for, the truth is that 95 percent of us don't change a thing.
And if you think people (well, at least most anyway) are going to voluntarily download an alternative web browser, or install a different music streaming service, or a separate email app that's more feature packed than the one that came with phone, you might as well be dreaming.
This reason to stick to default apps and options — how many of us change the default phone ringtone, or change the wallpaper, or tweak the home screen layout? — that come out of the box may not seem such a big deal, but in reality, these subconscious decisions that "we're not even aware of making" have huge ramifications.
It is the reason Facebook's privacy settings are deliberately designed to be confusing, while giving us, the users, an impression that we are in control. It is the reason why Google pays Apple close to US$ 10 billion a year to remain the default search engine in Safari browser across iPhones, iPads and Macs.
It is the reason why Apple booted Google Maps off iOS in 2012 in favour of in-house variant Apple Maps. It is also the reason why tech giants like Apple and Google are in hot water for bundling apps like Apple Music, Google Search and Chrome browser in their operating systems, facing antitrust complaints from rivals who say it's not a level playing field.
While default options are generally designed with an intention to improve user experience, the tight integration of software and services with default settings is what feeds most companies' bottom lines. Given iPhone and iPad's ubiquity in most developed markets across the world, imagine if Apple were to change the default search engine on Safari to DuckDuckGo or Startpage. Not only will Google experience a decline in search traffic (in the U.S. in particular), advertising revenues will plummet along with it, severely hurting its profit margins.
Viewed through this lens, it's no surprise that Apple Music has surpassed Swedish competitor Spotify in paid subscriber count in the U.S. According to The Wall Street Journal (paywall), Apple Music had 28 million U.S. subscribers for the month of February, more than the 26 million Spotify had. That's not all. "Apple Inc.'s streaming-music service has been adding subscribers in the world's biggest music market more rapidly than its Swedish rival—a monthly growth rate of about 2.6% to 3%, compared with 1.5% to 2% for Spotify," the report added.
On iPhones and iPads, Apple Music is given a prominent place in the home screen, and although the app can be uninstalled, the fact that it's advertised as the default music streaming app is enough to incentivise unsuspecting users who aren't on rival services like Spotify, Amazon Music and YouTube Music into giving Apple Music a chance. (On a side note, it's also to be noted that Spotify struck a deal with Samsung last year to make it the default streaming service for its devices.)
Ultimately though, while Apple is nowhere as dominant as Android when it comes to market share, it does handsomely benefit from a monopoly on iOS: "If you want the Apple software experience, you have no choice but to buy Apple hardware," wrote Stratechery's Ben Thompson last year.
It's this precise reason that cuts deep into the core of Apple's antitrust issue, driving Spotify to file a complaint against the iPhone maker, accusing it of abusing its position as owner of the App Store to stifle competition.
And it makes much more sense in light of revelations that Spotify is losing share to Apple Music in markets where it matters the most: North Americas and the E.U. — a subscriber of Apple Music or Spotify from the U.S. or the U.K. pays US$ 120 a year for the service, and the same user will pay just US$ 18 per year for the same service in markets like India and Africa. (Apple in fact just announced today that it's cutting price of Apple Music subscription in India from US$ 1.73 a month to US$ 1.43 a month. Spotify, in contrast, costs US$ 1.67 a month.)
But just as Apple is facing an iPhone sales slump and is increasingly pivoting to services as a means to shore up revenues, the company has become vulnerable to antitrust action in three different ways:
And if you think people (well, at least most anyway) are going to voluntarily download an alternative web browser, or install a different music streaming service, or a separate email app that's more feature packed than the one that came with phone, you might as well be dreaming.
This reason to stick to default apps and options — how many of us change the default phone ringtone, or change the wallpaper, or tweak the home screen layout? — that come out of the box may not seem such a big deal, but in reality, these subconscious decisions that "we're not even aware of making" have huge ramifications.
It is the reason Facebook's privacy settings are deliberately designed to be confusing, while giving us, the users, an impression that we are in control. It is the reason why Google pays Apple close to US$ 10 billion a year to remain the default search engine in Safari browser across iPhones, iPads and Macs.
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| Apple Music (Image: Apple) |
It is the reason why Apple booted Google Maps off iOS in 2012 in favour of in-house variant Apple Maps. It is also the reason why tech giants like Apple and Google are in hot water for bundling apps like Apple Music, Google Search and Chrome browser in their operating systems, facing antitrust complaints from rivals who say it's not a level playing field.
While default options are generally designed with an intention to improve user experience, the tight integration of software and services with default settings is what feeds most companies' bottom lines. Given iPhone and iPad's ubiquity in most developed markets across the world, imagine if Apple were to change the default search engine on Safari to DuckDuckGo or Startpage. Not only will Google experience a decline in search traffic (in the U.S. in particular), advertising revenues will plummet along with it, severely hurting its profit margins.
Viewed through this lens, it's no surprise that Apple Music has surpassed Swedish competitor Spotify in paid subscriber count in the U.S. According to The Wall Street Journal (paywall), Apple Music had 28 million U.S. subscribers for the month of February, more than the 26 million Spotify had. That's not all. "Apple Inc.'s streaming-music service has been adding subscribers in the world's biggest music market more rapidly than its Swedish rival—a monthly growth rate of about 2.6% to 3%, compared with 1.5% to 2% for Spotify," the report added.
On iPhones and iPads, Apple Music is given a prominent place in the home screen, and although the app can be uninstalled, the fact that it's advertised as the default music streaming app is enough to incentivise unsuspecting users who aren't on rival services like Spotify, Amazon Music and YouTube Music into giving Apple Music a chance. (On a side note, it's also to be noted that Spotify struck a deal with Samsung last year to make it the default streaming service for its devices.)
Ultimately though, while Apple is nowhere as dominant as Android when it comes to market share, it does handsomely benefit from a monopoly on iOS: "If you want the Apple software experience, you have no choice but to buy Apple hardware," wrote Stratechery's Ben Thompson last year.
It's this precise reason that cuts deep into the core of Apple's antitrust issue, driving Spotify to file a complaint against the iPhone maker, accusing it of abusing its position as owner of the App Store to stifle competition.
And it makes much more sense in light of revelations that Spotify is losing share to Apple Music in markets where it matters the most: North Americas and the E.U. — a subscriber of Apple Music or Spotify from the U.S. or the U.K. pays US$ 120 a year for the service, and the same user will pay just US$ 18 per year for the same service in markets like India and Africa. (Apple in fact just announced today that it's cutting price of Apple Music subscription in India from US$ 1.73 a month to US$ 1.43 a month. Spotify, in contrast, costs US$ 1.67 a month.)
But just as Apple is facing an iPhone sales slump and is increasingly pivoting to services as a means to shore up revenues, the company has become vulnerable to antitrust action in three different ways:
- It has been prioritising its own apps in App Store search results
- It has a pattern of turning successful third-party apps into native features of its operating systems
- The 30% cut on subscription app revenues has disadvantaged rivals like Netflix and Spotify, which have passed the extra costs to customers, artificially inflating its price over what Apple is able to charge for its equivalent service. (For instance, Apple Music and Spotify both cost US$ 9.99. But Spotify charges users US$ 12.99 if they opt to renew for the service using iTunes to offset Apple's 30% cut.)
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