The service will launch on June 30, costing 10 dollars (£6.50) a month, but free for the first three months.
The introduction included an appearance from Drake as well as a performance from The Weeknd.
On stage in San Francisco, the iPhone maker also told the 6,000 attendees of the conference about software updates to both iOS and Mac OS X - the software that runs on Apple's mobile devices and desktop computers.
Apple has "gone within" to name the next version of its desktop software, unveiling OS X El Capitan as the next version for the Mac.
The new software will work on Apple's desktop and laptop range, and appears to be a more measured update compared to last year's.
El Capitan is the name of a mountain in Yosemite National Park in California, with Yosemite having been the name of last year's update. The iPhone maker has adopted the tradition of naming its software after landmarks in California in recent years.
A new split-screen feature was shown off, which will enable users to organise different programme windows so they can all be seen at once, as well as neatly combining them into a split screen. Apple said the aim is to boost productivity for everyday users.
Apple chief Tim Cook called the event "the epicentre of change for the industry".
Following comments from Mr Cook on Sunday that the technology industry had to do more to promote diversity, the event was also notable for the presence of two women Apple executives on stage - Jennifer Bailey and Susan Prescott.
Also dispensing with the usual figures and sales updates, Mr Cook said simply that "everything is going great".
The firm's Craig Federighi added that OS X Yosmite had the fastest adoption rate of any desktop software ever. He introduced a graphic on-screen that showed the rate for Apple's software at 55%, compared to 7% for perennial rivals Microsoft and its Windows 8.1 software.
Mr Federighi confirmed that a public beta of El Capitan would become available in July, before becoming available as a free upgrade in the autumn.
Mr Federighi also unveiled the next version of Apple's mobile operating system: iOS 9.
The update focuses on Siri, with the Apple voice assistant becoming more "proactive".
Demoed on-stage, the new software was shown to be able to understand context, with music playing when you plug in headphones and start running, and suggests apps based on the user's habits.
The update is similar to Google's Now software, and appears to show Apple making an effort to improve its digital assistant, which has struggled to keep up with Now, and Microsoft's Cortana.
iOS 9 will also automatically add invitations to a user's calendar that are sent in email, as well as suggest a possible contact name when an unfamiliar number phones you - based on your emails, once again.
The software's search feature has also been improved, now enabling users to see and jump straight into apps from search results.
Siri can also now be used to voice search for photos on you device. Apple are calling the whole update "Intelligence".
Mr Federighi also made a point on privacy by saying that Apple is "not interested" in user data and that Apple doesn't mine user data. "It stays on your device, under your control," he said.
Last week, Tim Cook accused Google of invading users' privacy by using their photos via a new app to mine data on users.
The Cupertino-based firm also announced an update to its mobile payment system - Apple Pay - including confirmation that the system will come to the UK next month.
Apple Pay will enable users to pay for items by touching their iPhone to contactless payment points.
"We will launch with eight of the most popular banks, more coming this fall," said Apple's Jennifer Bailey.
It was also confirmed that as well as in stores such as Boots and Marks & Spencer, Apple Pay will work on the London transport system.
The rumoured introduction of rewards cards into Apple Pay was also confirmed, with the Passbook app being renamed Wallet, and will now house credit cards and reward cards being held in one place.
Apple Maps is also getting a much-anticipated update, with public transport systems being added to a host of global cities.
As well as adding bus and train routes, station layouts are included which means directions will be more accurate, and send users to the correct exit.
London will be among the original cities included as part of the update.
A Flipboard-rivalling News app was also shown off for the first time.
Apple's Susan Prescott said: "The articles can come from anywhere, but the best ones are built in Apple News format.
"Articles are shown in a magazine-style format created by Apple, and are curated to content users want to see. Articles and publications can be favourited, with the app 'learning' what you like to read over time.
"We think this offers the best mobile reading experience ever."
Ms Prescott added: "News is smart, so the more I read, the better it gets at showing me stories I'm interested in.
"We think there's never been a more beautiful magazine reading experience."
The new app will include content from the like of the Guardian, BuzzFeed and Time, and will be rolling out in the UK, US and Australia first, as part of iOS 9.
iOS 9 will also introduce multi-tasking to the iPad for the first time.
Users will now be able to use a feature called "slide-over" that will enable you to bring a second app on-screen while using the internet.
A split view will enable users to interact with both apps and windows at the same time.
The feature will also support picture-in-picture, so users can watch videos on the corner of the screen while also using another app on their iPad.
Mr Federighi also spoke of the "foundations" of iOS. Battery life is one of these, and Apple has introduced a new low power mode, which can extend battery life by up to three hours.
"It pulls switches you didn't even know existed," he said.
The number of space needed to make an iOS update - a common user problem - has also been greatly reduced from 4.6Gb to 1.8Gb.
The internet of things was also addressed, with Apple adding support for window shades, motion sensors and security systems, as well as remote access to these appliances from wherever you are via iCloud.
Mr Cook returned to the stage to announced that the Apple App Store has surpassed 100 billion downloads in the seven years since it launched.
"We believe in technology designed for the wrist", said Mr Cook, discussing the new version of Apple Watch software, called watchOS.
Apple's Kevin Lynch took to the stage to show off the new features of watchOS, including new watch faces, which can be made up of images for the first time.
Timelapse photos shown as live, based on the time of day, can also be used.
Mr Lynch also showed off "Time Travel", a feature that will enable users to scroll forward and back to see the different parts of their schedule. "Flux Capacitor sold separately," said the message on-screen.
The drawings in Digital Touch can now also be done in a range of colours.
The Apple Watch will also support short video playback on the watch face, including from apps such as Vine.
Siri can now also be used to control aspects of your smart home, asking it to change lighting for example, as well as ask the digital assistant to show the Glance notifications that run on Apple Watch.
An Apple Watch was also shown controlling the temperature inside a connected car, as well as using voice to reply to emails.
The new watchOS will launch in the autumn, it was confirmed.
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