Amazon Challenges Apple and Spotify With New Music Streaming Service

Amazon officially became the latest entrant into the highly competitive music streaming business with its launch of a full-fledged music streaming service. The company unveiled Amazon Music Unlimited, a challenger to Apple Music and Spotify that will at first launch in the US, on Wednesday.

If you are a user of either Apple Music, Tidal (partly owned by a group of artists including the rapper Jay-Z), Google Play, and even YouTube Red, you may be considering a switch soon as on-demand music service is offering discounts to members of its Prime subscription service.

While Amazon’s on-demand music service is being offered to the general public for $9.99 a month– the same price as Spotify Premium and Apple Music, with Amazon paying the difference. But Amazon Prime members will pay a discounted $7.99.

Amazon is also selling a $3.99 a month version that will play exclusively on the Echo, the company’s Wi-Fi speaker. It said the service will launch in the UK, Germany, and Austria later this year, although pricing was not announced.

Amazon has been hinting at its desire to enter the music streaming game for some time.  In 2008, it launched a rival download service to iTunes which aimed to undercut Apple on price, as well as offering songs without the digital rights management that iTunes employed.

However, Apple continues to dominate a shrinking download market. Apple caused a big shakeup last summer with the release of Apple Music, which incorporates a live radio station and social network. By offering Prime members a discount, it is aiming to poach some Spotify and Apple customers.

As it plunges deeper into the crowded streaming field, Reuters reported Amazon is counting on the Echo, a smart speaker that responds to voice commands, to set it apart. Released broadly last year, the Echo has become a surprise hit, prompting many to predict that voice will become a key way users interact with technology – and music is central to the device’s appeal.

Amazon Echo

Amazon has built an elaborate system of voice controls for listening on the Echo. The company believes such smart home devices will be a key source of growth for the music industry, said Steve Boom, vice president of Amazon Music.

The first phase of growth (in music streaming) was driven almost entirely by smartphones,” he said in an interview. “We believe pretty strongly that the next phase of growth in streaming is going to come from the home.”

“The low price for Amazon’s streaming service is consistent with the company’s reputation for undercutting the competition and signals the music industry is beginning to accommodate consumers who are unwilling to pay $9.99 per month. Having watched revenues plummet from the CD era, label executives have been reluctant to budge on price, but they have come under pressure as streaming accounts for more of the pie,” Reuters reported.

Those who sign up to Prime spend several times more than other shoppers, so Amazon is testing new ways to encourage people to sign up.

Boom said he is optimistic that the new prices will expand the market. “We’re moving music away from a one-size-fits-all approach,” Boom said. “We are the ones who have been pushing this the hardest.”

Music industry revenues from streaming are due to overtake those from downloads this year. In 2015, the number of people using a streaming service rose from 41m to 68m.


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