The number of U.S. Apple Music subscribers is expected to at least draw even with, if not overtake, Spotify in about July.

While Spotify continues to be the darling of the music industry in terms of providing superior marketing tools to labels and artists, as well as having the ability to create a buzz among music fans, Apple Music's streaming service is coming on strong, raising questions about Spotify's ability to turn a profit down the road.

At the end of October, about 18.2 million of Spotify’s 70 million paid subscribers worldwide were in the U.S., while Apple had about 15 million subscribers in the U.S., according to sources. For the full year of 2017, Billboard estimates that Apple added about 6 million paid subscribers in the U.S., while Spotify added about 5.2 million subscribers.

Sources that represent almost 60 percent of music industry market share in the United States tell Billboard that Apple Music currently has about 15 percent of the market of overall music purchases from United States record labels, while Spotify has about 17 percent of that market. But when the iTunes download stores is brought into the equation and its revenue is added to the subscription revenue from Apple Music and its Beats Digital Radio service, the combined market share of the Apple-owned digital services rises to 30 percent. That makes Apple almost two-thirds larger overall than Spotify in the U.S., although that may not be the case for certain independent labels and distributors.

As it is, the number of U.S. Apple Music subscribers is expected to at least draw even with, if not overtake, Spotify in about July. But with downloads declining at an alarming rate, Apple's overall lead in market share, including revenue from iTunes, is expected to narrow by the end of 2018, industry sources project. The projection that Apple Music could surpass Spotify this year was first reported by the Wall Street Journal Sunday night.

Apple's impending catch-up -- and its U.S. dominance -- is adding to skepticism over Spotify's long-planned public listing. While companies like Apple, Amazon and Alphabet can afford to operate streaming services at slim margins and offer cut-rate subscriptions because they primarily sell other products and services (Amazon Music Unlimited costs $4 a month for Echo owners, for example) it isn't clear how long Spotify will be able to compete with these tech giants as a public company under pressure to turn a profit.

Driving Apple Music’s U.S. growth is steady increases of almost four percent in its monthly subscriber base, as compared to Spotify’s U.S. subscriber base, which has been growing at one-to-two percent a month in the U.S., except for when it's running a subscription special, according to a Billboard analysis. In promotional periods, Spotify’s subscriber growth surges up to seven percent over the prior month.

The Swedish digital service added almost 4.4 million subscribers in the first 10 months of 2017 to about 18.2 million subscribers. While Billboard doesn’t have a year-end subscriber count for Spotify, sources say it was about 19 million in the U.S.

In 2016, Spotify’s paid subscription tier generated revenues of about $1.04 billion, when it had 13.8 million subscribers; in the first 10 months of 2017, Spotify’s paid tier had already surpassed that total, with U.S. revenue reaching $1.18 billion, according to data it supplies to music publishers obtained by Billboard.

Meanwhile, Apple Music started the year with about 10 million subscribers and finished the year with about 16 million, based on guidance from sources and Billboard calculations. Billboard further extrapolates that both Apple Music and Spotify’s paid tier in the U.S. will each reach about 21 million subscribers by July 2018, although that timeline could be hastened if aggressive promotional tactics are employed by either service.

In 2016, Spotify's ad-supported tier had 24 million U.S. users and generated about $200 million in revenue; as of October 2017, that user base had grown to about 26 million and had already generated advertising revenue of about $225 million.

Both the overall revenue numbers for Spotify's ad-supported tier and paid subscriber tier could be higher, as these revenue figures are based on what’s described as serviceable revenue numbers and doesn’t include such things as credit card fees and commission on advertising sold by outside agencies. Not including those deductions, Billboard puts revenue from the ad-supported tier and the paid subscriber tier at about $1.45 billion by the end of October and estimates the digital service finished the year with $1.7 billion in revenue.

On the other hand, Billboard estimates that Apple's subscription service and download store had revenues that totaled about $2.7 billion last year. Moreover, on a monthly basis, Apple is currently approaching the same revenue level as Spotify, if not yet on a 12-month run rate, says one label source. However, independent labels may be seeing a different set of numbers than the major labels -- and, at some indie companies, Spotify comes out about equal, revenue-wise, to Apple’s combined operations.

Spotify declined to comment on any numbers in this story except to say that it had over 70 million paid subscribers worldwide, over 140 million users worldwide, was available in 61 markets and had paid $5 billion to rights holders. Apple declined comment.

Besides the race for growth, another dichotomy is occurring between Apple and Spotify. As Spotify grows larger, its per-stream payment rate to labels is dropping. Last year, Spotify paid out almost $0.06 cents per stream -- or $6 per 1,000 streams -- to record labels, who in turn have to pay artists; and nearly $0.013 per play -- or $1.30 per 1,000 streams -- to publishers and songwriters. This year, the label per-stream rate has fallen to about $0.0048, or $4.80 per 1,000 streams. On the other hand, its per-stream rate for its ad-supported tier to labels has risen from $0.0017 -- or $1.70 per 1,000 streams -- to $0.0018, or $1.80 per 1,000 streams.

Looking at Apple Music, sources say that the all-paid service is paying out close to $0.007 to $0.008 per stream, or $7 to $8 per 1,000 streams. With both services typically charging the same amount per subscriber except in promotional periods, the question arises: how is Apple paying out a higher per-stream rate? It could mean that Spotify's paid subscribers are consuming more music than Apple's subscribers. Or it could mean that Spotify has more promotional deals cooked into its numbers than Apple, which would be saying something, considering Apple itself provides three-months free on the front end of its subscription.

In the meantime, any word about Spotify’s revenue picture leaves Wall Street to scrutinize if it can still pull off its long-expected public offering successfully. With some putting the company’s worth at about $19 billion, the health of the entire music industry, not just Spotify, is riding on whether this will happen this year. If Spotify, as the pipeline, is successful in going public, then industry executives will be left to wonder how much the companies who actually own the copyrights are worth.

Yet despite its valuations, Spotify has continued to steadily lose money, and some are wondering how much it has to scale in order to be profitable. Two weeks ago, the latest Copyright Royalty Board ruling may have thrown a wrench into the public-offering plans by increasing the headline rate that digital on-demand streaming services will have to pay publishers and songwriters from its current 10.5 percent of revenue level to 15.1 percent of revenue by 2022.

However, on the recorded-music side of the business, Spotify appears to have had success in negotiating lower rates, at least in the short term, as reported widely at the end of 2016 and in early 2017. For the year ended Dec. 31, 2016, in the U.S. Spotify paid about 58.5 percent of revenue to labels and another 12.64 percent to music publishers, for a total of 71.7 percent of revenue, according to the financial data obtained by Billboard. For the first 10 months of 2017, the amount paid to labels and publishers declined about three percentage points to about 68 percent of revenue. The good news for the service is that the payments to labels have been has steadily declining all year, falling to 51.5 percent of revenue in October; with publishing added in, that makes the final number about 64.4 percent of revenue for that month.

On the ad-supported side, Spotify appears to have had even more success in negotiating lower rates in the U.S. There, Spotify paid a total of 63.7 percent of revenue to labels and publishers through the first 10 months of 2017. Overall it looks like the percentage increases in royalties gained by the publishers over the next few years had already been at least offset by Spotify in its earlier negotiations with labels.

With Spotify’s margins at least stabilizing, if not headed in the right direction altogether -- even with one last, albeit expensive, $1.6 billion lawsuit filed by Wixen Music Publishers claiming copyright infringement -- Spotify still looks likely to most in the music industry to go public this year. And while Apple Music may soon have, by any metric, overall better revenue numbers than Spotify in the U.S., it still has a ways to go to win back the hearts of those record label executives it held when downloads were still king back -- especially the independent labels who swear by Spotify's marketing prowess. And worldwide, given the costs of localization in various markets and other dynamics, as well as Spotify's head start, the streaming competition is a whole other story.