Called Apple Music, it will cost $9.99 per month, or $14.99 for a family membership with up to six users (although it has not confirmed UK pricing, it is expected to cost from £9.99).
It will stream songs, and also feature a 24 radio station called Beats One, and a smart prediction service to recommend songs.
Today we are announcing Apple Music,' said Tim Cook.
'It will change the way that you experience music forever.'
The new service was introduced Jimmy Iovine, who became an Apple employee when Apple bought his Beats.
'It's all the way you love music all in one place,' he said.
'Algorithms can't do this, you need a human touch,' he said.
'It's a music lover's dream'
It also has a Beats One service with live 24 hour radio stations around the world.
'Apple told me to put the incredible in front of the average, said Zane Lowe, the DJ who is heading the Beats One station.
It also has connect, a social network allowing artists to talk to fans directly.
'You can search and stream from millions of songs, said Apple's Eddy Cue.
The firm also revealed a major update to its Siri software on the iPhone, a new version of its Mac software and the first third party apps for the Apple Watch, along with its Apple Pay service coming to the UK next month.
'We have a lot of great things to talk about this morning,' Tim Cook told the audience.
'We're bringing a lot of new features to iOS, OSX and bringing native apps to the Watch,' he said
DRAKE is one of the artists signed up for this service |
Craig Federighi, Apple's senior vice president of Software Engineering, revealed El Capitan, the firm's new Mac software.
It allows users to search using normal sentences, and is far faster than the previous version, called Yosemite.
Apple said it had made the software far more reliable, fixing bugs and making it cleaner to use.
It has also boosted games on the Mac by bringing the same systems that run iPhone and iPad games to the desktop.
He also unveiled a new version of iOS, called iOS9.
'We wanted to add intelligence throughout the system. Siri has quietly become incredible popular, with a billion requests a week.'
Apple's Maps app also got a major update.
'We see 5 billion maps requests per week, said Federighi.
'Maps historically have been focused on drivers, but now we've create a public transit app for them.'
'Users can see stations, and exactly when trains will arrive, as well as walking directions.
'We surveyed the entrances and exits to give accurate timings, and we've taught Siri all about Transit.'
Jennifer Bailey of Apple revealed the firm is expanding the Apple Pay service, adding Discovery to the system and adding more retailers including Trader Joes and others.
She also said Square was launching a new reader later this year to allow small firms to accept Apple Pay.
The passbook app has also been renamed wallet.
She also revealed Apple Pay was coming to the UK next month.
It will launch with eight banks, and merchants including Costa, Boots and M&S.
Londoners will also be able to use the service on buses and trains.
Tim Cook revealed over 10 billion apps have been download from its app store, and has paid over $30bn to developers, and showed a video claiming 'the app store is more important than the industrial revolution'
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