Amazon Aiming Its Guns Directly at Spotify and Apple Music

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According to reports Amazon is planning to launch a subscription-based music streaming service to compete directly with Spotify and Apple Music. 

Plans are said to be in the early stages, although there is talk that the service is to launch as soon as this fall.

Amazon Prime users are able to listen to roughly one million songs for $99-a-year, however reports are now surfacing that the new streaming platform may charge a different month-to-month fee.  Reports are saying that there have been several meetings in the past few weeks to discuss licensing tunes for the new subscription music service.  The new service is said to cost $9.99 per month, but will contain a more diverse music selection than what is currently available via Prime.

This is another attempt from Amazon’s Chief Executive, Jeff Bezos, to become the premier distributor of entertainment content. Just the other day, Amazon launched it’s Pandora-like radio service which already boasts hundreds of prime stations across all genres.

Paul Firth, Amazon UK’s head of music, insisted Prime Music is “not in competition with Apple or Spotify” as it is based on a different financial model.  But this new music subscription service, if it materializes, represents a direct attempt to compete with the likes of Spotify and Apple, who have the same pricing strategy.

Amazon currently claims to be the biggest seller of physical music in the US, and the second-best seller of digital music. Although these claims are not concrete at the moment, expanding the footprint represents an obvious move for Amazon.  With a new subscription service, the company solidly secure its goal of becoming the premier distributor of entertainment content.


6 Responses

  1. Troglite

    I apologize if my comments seem repetitive on this topic, but I feel like the DMN community has been too quick to dismiss Amazon’s offerings as inconsequential.

    “Amazon currently claims to be the biggest seller of physical music in the US and the second best seller of digital music. Although these claims are not concrete at the moment, it is an obvious move for Amazon, and with a new subscription service the company could well fulfil their attempts of becoming the premier distributor of entertainment content.”

    I think this perfectly describes Amazon’s unique position and opportunity. Several industries, including music, are moving from an ownership-based to a consumption-based revenue model. During this transition, the overarching goal is to balance two opposing needs. First, businesses must build the new consumption-based services that consumers increasingly demand. But, they must also reduce cannabilization of their existing ownership-based services in order to maximize their margins to the greatest extent possible during this transition.

    One of the largest problems with the current set of streaming music services is that they are effectively limited to fairly expensive all you can eat subscriptions or ethically questionable free ad-funded services. There seems to be an obvious need for addition options including pay as you go (e.g. perhaps 3-5 cents per stream). But there also seems to a lot of uncertainty regarding how much additional revenue could be captured by these types of additional consumption-based sales models and the impact they would have on subscriptions and downoad sales. I would assert that Amazon is in a remarkable position to answer these questions. Prime is basically a restricted subscription model. Now, they appear to be adding a full catalog subscription at I higher price point. They already have a very strong download and physical media sales business established. Add pay as you go streaming (could be easily incorporated into amazon’s existing gift card infrastructure) and some additional limited subscription options (e.g. classical or jazz-only subscriptions ) and Amazon could easily end up holding the broadest array of service options in the industry. More importantly, Amazon’s unparalleled ability to analyze the behavior of their users and to apply those insights to maximize their revenue across all of these different options could produce a sustainable competitive advantage.

    I for one will be keeping a close eye on these developments. I am very curious to see how the licensing negotiations proceed, too. Based on personal experience, when it comes to negotiating deals…. amazon is as tough as they come.

  2. Name2

    Amazon’s disadvantage is their apparent need to overcomplicate what should be straightforward entertainment transactions.

    * Getting Amazon Instant Video up and running on non-Fire tablets required way too many hoops and workarounds.

    * Their music streaming Android app still doesn’t allow for local saves to SD Card. An independent developer has been filling the void for years with an Android app called Amazon MP3 Mover.

    * When the Beatles went online with streaming, they were available in Prime, but I found you couldn’t just stream them. Nope. As with any Prime-provided tracks, you have to add them to your Amazon “Library” first. THEN you can play them. WTF?

  3. R Diddy

    Name2, some clarifications on your Amazon Music comments:

    -Amazon Music has had SD card support since fall of last year. No need to use another app. It works great.

    -You don’t need to add anything before streaming. Just go to the Prime Music section of the app (desktop, mobile, etc) and press play. You don’t have to add anything to your library just to play it.

    As a customer, the Prime Music benefit is pretty sweet in my opinion.

    • Name2

      -You don’t need to add anything before streaming. Just go to the Prime Music section of the app (desktop, mobile, etc) and press play. You don’t have to add anything to your library just to play it.

      To be clear, it was while looking over my Prime options on the web (not mobile), that the Beatles tracks (indeed, anybody’s) that I didn’t already have in my library (which at that point was strictly my Amazon MP3 purchases and “AutoRip” tracks stemming from physical purchases) and wanted to hear had a giant “Add to Library” button as the friction element.

      And thanks for the news about the changes to the mobile app wrt using the SD Card. It certainly simplifies things.

      • Troglite

        NAme2, I agree with you about that aspect of the web client in Prime Music. I chalk this up to a limited level of investment in a service that is currently nothing more than an add-ed bonus for Prime members. I am inclined to believe that the company that invented the concept of “one click” purchases can improve the UI of their streaming services if/when it becomes a higher business priority.