Amazon is reportedly in talks with major record labels to roll out its own free, ad-supported music streaming service. Until now, the ’Zon has offered its limited Prime Music service for Primers, plus standalone Amazon Music Unlimited subscriptions for $10/month.
According to Billboard, Amazon would start with a limited catalog and pay record labels on a per-stream basis, regardless of ad revenue. Amazon may also be able to make use of its label relationships from its CD-selling days (remember CDs, kids?).
Will Spotify soon be playing second fiddle?
Spotify, with its 100m paid subscribers, is the only subscription-based streaming model with a free tier. But the industry leader, which has long-struggled to become profitable, may be losing stream.
With this entry into the market, Amazon is flexing its ability to be a loss leader in a highly competitive space: Spotify shares slid 4% in response to the news.
Sizing up the rest of the competition, big and small…
YouTube, which accounts for nearly half of global tunage consumption, has long rock-blocked paid streaming services, and Apple Music has strong numbers, but no free offerings. SoundCloud’s recent positioning change-up pulled its 175m users out of direct competition.
Though reports suggest there are only 20m Amazon music subscribers, Amazon will likely push on the Echo integration aspect and look to pull conversions from its substantial Prime base.
Rumor has it the new ad-supported service will be available through Echo speakers, possibly this month.
