Calling it a "revolutionary music service," music industry figure Jimmy Iovine took the stage at the company's annual conference to announce the subscription service.
Apple Music includes a service to connect artists and fans and what the company described as a global radio station called Beats 1. The radio station will be hosted by ex-BBC DJ Zane Lowe and other big name sign-ups.
While late to the streaming music business, Apple has strong advantages: deep relationships with music companies; a global brand; and hundreds of millions of customers - and their credit cards - through iTunes.
Apple Music's $9.99 a month price takes effect after a three-month free subscription period. The company is also offering what it calls a "family plan" for $14.99 a month for up to six family members. Users will not have to pay to listen to Beats 1.
The new service will be launched in over 100 countries on June 30. The app will initially be restricted to iOS, Windows PCs and Mac computers, but will extend to Android phones and Apple TVs later in the year.
Spotify's CEO tweeted: "Oh, ok" during the press event before quickly deleting the tweet.
Meanwhile Apple also announced the next version of its desktop software OS X El Capitan. The iPhone maker has adopted the tradition of naming its software after landmarks in California in recent years. El Capitan is the name of a mountain in Yosemite National Park in California, Yosemite having been the name of last year's update.
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.
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 combine them into a split screen. Apple said the aim is to boost productivity for every day users.
The firm's Craig Federighi 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, and 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 suggest apps based on the users' 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 devices. 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 user 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. It also confirmed that the UK will be the first country to get the service outside of the US.
Apple said that several of the UK's leading banks had agreed to support Apple Pay including Ulster Bank.
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.
Richard Donnan, Managing Director, Retail Banking at Ulster Bank said: "We are really looking forward to being one of the first banks in Northern Ireland to offer Apple Pay to customers. The introduction of Apple Pay is another exciting new opportunity for our customers.”
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.
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.
Internet of things
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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