RBC: Apple is beefing up its music service as it continues to battle Spotify (AAPL)

pulse

June 23, 2017 5:54 PM

The music streaming service is negotiating prices, increasing subscribers and developing original content in its attempt to double its services revenue by 2020.

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Apple Music is making big strides in its fight against Spotify.

The music streaming service is negotiating prices, increasing subscribers and developing original content in its attempt to double its services revenue by 2020, according to a recent note from RBC Capital Markets.

According to the note, Apple's services business will be as large as a Fortune 100 company with an estimated $28 billion in revenue this fiscal year. Apple Music and iTunes will account for an estimated $5.5 billion in revenue this fiscal year, according to RBC.

In an attempt to grow its music service and push out rival Spotify, Apple is trying a range of strategies.

Lowering prices for yearly subscribers:
Apple is fighting labels for a higher cut:
according to a story from Bloomberg.
New social features:
New original content:
More Music:

All these recent improvements have led to an increase of 7 million subscribers for Apple Music this year. Spotify added about 10 million new subscribers from September to March, according to RBC. Spotify has 50 million current subscribers compared to Apple Music's 27 million.

RBC thinks the improvements to Apple Music could result in meaningful subscriber and revenue growth. The bank has a price target of $168 which is 14.5% higher than the current price of $146.81.

Shares of Apple have grown 26.44% this year.

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