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Amazon Prime Music Unlimited: Reaches Feature Parity With Competitors, Lacks Differentiation

by User Not Found | Oct 17, 2016

After launching a standalone video streaming service earlier this year, Amazon launched its own standalone music streaming service, Amazon Prime Music Unlimited, on October 12, to make a fuller content offer.

Amazon claimed the total library includes “tens of millions” of songs, having struck deals with Sony, Warner, hundreds of indie labels, and, more importantly, Universal, which plugs a hole in the catalogue of its earlier, more limited attempt on music streaming with Amazon Prime Music. The updated catalogue puts Amazon in a comparable position versus Spotify, Apple Music and Deezer when it comes to the content breadth.  Prime Music Unlimited also offers “thousands” of human curated playlists.

Prime Music Unlimited comes with three tariff options: a standard individual subscription will be $7.99 per month or $79 per year for Amazon Prime members ($9.99 per month for non-Prime members) that enables streaming to smartphones, on website as well as to Amazon devices like the Fire TV stick. A family plan will come later this year with $14.99 per month or $149 per year that can be shared by up to six family members.

The option that has been under spotlight is the $3.99 monthly subscription specifically for streaming to Amazon’s Echo device, powered by Amazon’s voice-based personal assistant Alexa. By talking to it, users can ask Echo to play music by title, artist, genre, mood, or decade. All these make sense to catch up but none is outsmarting competition, e.g. Apple Music with Siri. One gimmick from the Echo / Alexa combo is to demand songs using bits of the lyrics. This is interesting, but less relevant for people like me, who pay less attention to the lyrics than to the music. At the end of the day, music is what makes songs songs (and what sets Bob Dylan apart from the other Nobel Prize laureates). So I would love to have a feature that plays a song based on my hummed tunes, like, “Alexa, play this”

4 bar music

and it plays. This would not only be a feature that no one else has offered but also bypass the irritating problem of accents. (By the way, those four bars above are from “Blowin' In The Wind”, in case you wonder.)

However, features aside, I simply don’t see Prime Music Unlimited make a big splash in the already crowded streaming market, or why Amazon should bother launching the service at all as nothing really stands out from the competition. Comments have been on the competitive pricing Prime Music Unlimited comes with, but with a closer look, the pricing isn’t really low. While the monthly $9.99 is now almost an industry standard, to qualify for the preferential rate of $7.99 or more favourable annual rate of $79 you need to first subscribe to the annual $99 Amazon Prime membership. The $3.99 is hitting a price point not seen by streaming services of such a catalogue size, but, first, you have to buy Echo with $180, and second, you lose the mobility that would normally come with streaming music. There is also a slight confusion with Echo as it has just made Spotify streaming a more integrated feature. Moreover, the service is only available in the US and will only come to the UK, Germany, and Austria late in the year.

But, and this is a big but, all the discussions on pricing and feature comparison are missing the point. Ultimately, Amazon’s ambition is in retail, and is on track to challenge the positions of the Walmarts and the Home Depots of the world. Two significant pieces driving this strategy are to make Amazon a more tightly knit ecosystem of its own, and to defend and expand its Prime membership base. Therefore offering all the necessary ingredients from video to music is an attempt to minimise the need of Amazon customers to go somewhere else to get these services. Meanwhile, all the other perks, from the earlier announced free cloud storage to the more recent free ebook access as well as the earlier, more limited Amazon Prime Music still available to Prime members with no additional cost, are all aimed at increasing the attractiveness of the Prime membership, as Prime members tend to spend much more than non-Prime members, nearly 5 times more actually, according to a recent research published by Morgan Stanley. Amazon never published Prime user number, but investors have estimated that it has increased to close to 70 Million. This is a base Amazon will be desperate to defend and to grow.

By this account, Prime Music Unlimited suddenly makes a lot of sense. The Prime Music Unlimited streaming to Echo is a classic hardware and service integration with the profit coming from selling hardware (so it matters less if you’re streaming Spotify to Echo), and its primary objective will be to support Amazon’s own ecosystem strategy. We have heard that music labels are not willing to allow streaming services to be sold below the de facto industry standard of $10 monthly subscription, so I would not be surprised if Amazon should take a smaller share than the normal 30% from the $7.99 monthly or $79 annual subscriptions paid by its Prime members, or not take any share from the $3.99 monthly subscription for streaming to Echo only.

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