Apple disputes numbers on Music users

Apple Music plays defense
Apple Music plays defense

In a rare move, tight-lipped tech giant Apple released numbers Wednesday disputing the findings of a study on Apple Music's retention rate.

Apple said 21 percent of people who signed up for the Apple Music trial are not continuing to use the service. That's in contrast to a study which found 48 percent of those who tried Apple Music are not current users, according to research company MusicWatch.

The methodology behind Apple's and MusicWatch's dueling data has sparked debate on whether Apple Music's debut was a hit or a flop. Some industry insiders say the answer may lie in between.

Read More Apple Music has 11 million trial subscribers

Apple Music, launched June 30, is an evolution of Apple's previous streaming services, iTunes Radio and Beats 1, that takes aim at popular online music players Pandora and Spotify.

In a fiscal third-quarter earnings conference call July 21, Apple CEO Tim Cook said the company was "thrilled" with the launch, citing "millions and millions" of free trial users and gushing reviews. Apple Music got 11 million users during its first month, the company said earlier this month.

But MusicWatch's online survey of 5,000 people between July 21 and Aug. 6 found just 11 percent of Spotify Free users and 6 percent of Pandora users said they now use Apple Music.

"In general, I don't agree with getting a public battle with anyone," said Russ Crupnick, managing partner of MusicWatch, who led the project team that produced the research.

"Numbers, depending on how they're collected, can mean very different things," Crupnick said. "I'm trying to work with Apple to understand the metric that they are using, so we can try to reconcile the differences."

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An advertisement for Apple Music is posted on a street in New York.
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What it means to "use" Apple Music—or for that matter any other service—is up for debate, Mark Gurman senior editor of technology blog 9to5Mac, said on CNBC's "Squawk Alley" Wednesday.

"So what Apple is telling websites is that their 79 percent number [of retained users] is if that user used Apple Music in the past week," Gurman said. "But they don't specify how many songs they streamed, if they used just the library feature ... so in reality, the number is somewhere in between."

Crupnick said MusicWatch's study measured various degrees of interest in Apple Music but left it up to a respondent's interpretation whether they considered themselves an active user.

But Gurman is looking at Apple's numbers beyond the study, too. He said the 11 million number is the same amount of users that adopted iTunes Radio during the first month, which got much less hype.

Read More What happens to your $10 after paying for Apple Music

Mark Mulligan, a media and technology analyst, also presents a "glass half full" and "glass half empty" perspective on his blog.

On one hand, Mulligan writes, Spotify had less than 100,000 paying subscribers five weeks after launching its premium tier. But though Apple's scale is "impressive," unlike Spotify, it has yet to collect any cash from listeners.

"Apple has done extremely well with hardware, and you could say that it revolutionized music with iTunes," Guy Kawasaki, technology business adviser and former Apple employee, said Wednesday on "Squawk Alley." "But services are a tougher business. That's one of the challenges Apple faces."

Read More Apple Music could lead to something more, says analyst

Eyes will continue to follow Apple Music when the current three-month free trials begin to expire in October, after which a $9.99 per month subscription fee will apply.

Sixty-four percent of users told MusicWatch that they were extremely or very likely to pay to subscribe to Apple Music after their free trials end. Kawasaki said even if the MusicWatch methodology holds water, that is a "remarkable result."

"Let's say the numbers are right ... I wish I could get that result in some of the things I do," he said.

Crupnick also said that the MusicWatch study showed a lot of upside opportunity for Apple Music.

"Everything has not fallen off a cliff. That's not what it says," Crupnick said. "To conclude that it's a failure, that it's a raving success—we don't' have a benchmark for that. If Apple does the kind of promotion they are famous for, some of those people will come back."

Apple's stock closed down modestly Wednesday, on a day when markets ended lower after a volatile afternoon.

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