Apple Music attracts more than 11 million trial members

(Reuters) - Apple Inc said on Thursday its new music streaming service has attracted more than 11 million members during its free trial period, a response that music industry experts called respectable but not overwhelming.

Apple Music rolled out with a three-month free trial period on June 30. Nearly 2 million people opted for the free trial family plan, which will cost $14.99 a month for up to six family members, the company said. The service costs $9.99 a month for individuals.

Apple’s iTunes Store helped revitalize the music industry a decade ago, but digital downloads have slumped in recent years amid a shift toward streaming. Unlike popular streaming services from rivals such as Spotify, Apple’s offering does not include a free on-demand tier, a decision praised by some in the music industry.

Apple shares were down 4 cents at $114.84 in early afternoon.

One analyst said that although the service has found a following, he would have expected Apple to attract more trial members given the hundreds of millions of people who already have credit cards on file with the company through its iTunes service.

“It’s respectable, but it would be more respectable if they were a new service that was just starting and people had to trust them,” said Ted Cohen, a former music executive who is now managing partner of TAG Strategic, a digital entertainment consultancy.

Based on typical conversion rates in the industry, it would be impressive if Apple convinced 20 percent of the trial members to become paying subscribers after the free trial ends, he added.

Spotify has more than 20 million paid subscribers worldwide, the company has told Reuters.

APP STORE STRENGTH

Apple’s initial base of users speaks to the continued demand for music streaming services, said Tyler Goldman, CEO, North America, of music streaming company Deezer. But while Apple Music includes some interesting features, such as a global radio station, the package fails to offer enough differentiation from rival services to attract a disproportionate share of the market, he said.

“I think it’s unlikely that they are going to dominate this category like they dominated the download business,” he said.

    Apple also said on Thursday that its App Store attracted the largest-ever number of customers in July, yielding $1.7 billion in transactions.

    Apple set a high-water mark for App Store customers in China in July.

It said it has now paid developers almost $33 billion.

Although App Store transactions are on the rise, Apple still draws the majority of its revenue from sales of hardware such as its blockbuster iPhone.

In the most recent quarter, Apple's revenue rose 32.5 percent to $49.61 billion from a year earlier, beating Wall Street expectations of $49.43 billion.

The company’s stock has dipped recently amid concerns about how its growing business in China will fare amid economic downturn in the country.

(Reporting by Julia Love in San Francisco; Editing by Jeffrey Benkoe and Matthew Lewis)