Apple has an 'untapped opportunity' it can pick up from Spotify (AAPL)

The iPhone maker could adopt Spotify's ad-supported model, which helps derive many of Spotify's paid subscribers, and do it even better, Daryanani says.

Sometimes the best way to beat your competition is to learn from them.

When Spotify filed to go public last week, industry watchers saw a dark cloud looming over Apple Music, the Silicon Valley company's own music-streaming service. However, an RBC analyst saw this as an opportunity for Apple to glean lessons from Spotify's filing by matching it in one of it's biggest revenue-driving schemes: advertising.

Though Spotify's paid subscribers accounted for 90% of the company's total revenue, it's ad-supported user base — which is around 159 million users — has acted as a "funnel" to bring in more than 60% of Spotify's paid subscribers since 2014, Amit Daryanani, an analyst at RBC Capital Markets, wrote in a note to clients.

"We wonder if an ad-supported version of Apple Music represents an untapped opportunity for Apple," Daryanani said.

By emulating Spotify, Apple could use a free, ad-supported version of Apple Music to attract users, which could later convert them into paid subscribers.

What's more, the ad-supported user base could also be a data conduit that reveals more about content consumption and user behavior, and that could be monetized, Daryanani says. He notes the data set from Spotify's user base is "significantly greater" than that of Netflix.

"Arguably, [a] similar amount of data available to AAPL would carry even higher monetizing potential," Daryanani said, especially given the higher disposable income of most Apple iOS users.

Furthermore, an ad-supported version of Apple Music could serve to increase Apple's penetration into international markets, Daryanani says. Sixty-eight percent of Spotify's total users come from outside the US, according to Spotify's F-1 filing.

According to the filing, Spotify appears to have more than twice as many paying users than Apple Music. Spotify had 159 monthly users and 71 million premium subscribers, as of December 31, 2017. By comparison, Apple has 36 million subscribers globally, the Wall Street Journal reported.

Spotify also has fewer users that are leaving its service each year. It reported its "premium churn" — the rate of Spotify premium subscription cancellations — has decreased every year. This suggests the company is not losing users to other competitors like Apple Music.

Despite the Swedish-based company's encroachment on the US music-streaming market, Apple Music is still on track to count more US-based paying subscribers than Spotify, according to the Journal.

RBC's price target for Apple is $205 per share, roughly 17% above its current share price.

Apple's stock was trading at $175.40 per share, and was up 1.91% for the year.