With three publications reporting Apple is looking to bundle Beats Music into iOS in 2015, it's prudent to start thinking about the size of an Apple music streaming service.
U.S. Market Opportunity
A Beats Music streaming service bundled into a future iOS update has the potential of being the largest paid subscription music service in the U.S. assuming Apple adopts a free ad-supported tier as well as a $5/month or $60/year paid tier. I reach this hypothesis by taking iTunes Radio adoption and growing it to account for a much better streaming Beats service (using the current product as a base). Exhibit 1 includes my estimates for U.S. paid and total subscribers as well as my rationale behind the estimates marked in red.
Exhibit 1: Beats Music Streaming Sub Potential - U.S.
Global Market (Including U.S.) Opportunity
One of the big unknowns is if Beats Music will eventually have the same global footprint as Spotify. Assuming Beats Music is bundled in iOS and is available in many countries, I suspect Apple's music streaming service could be bigger than Spotify. I reach this hypothesis by using Spotify's global to U.S. paid subscriber ratio and assuming Beats carries a more U.S.-centric focus, detailed in Exhibit 2.
Exhibit 2: Beats Music Streaming Sub Potential - Global.
Running further with revenue assumptions would quickly reveal that a Beats Music streaming service bundled into a future iOS update would not have a significant impact on Apple's income statement. Nevertheless the potential of Apple holding off competitors and remaining on top of the music relevancy chart has the potential of being much more valuable.