Amazon challenges Apple, Spotify with new music streaming service starting at $3.99 a month

“Amazon.com Inc. on Wednesday launched a full-fledged music streaming service with subscriptions as low as $3.99 per month for owners of its Amazon Echo speaker, accelerating the industry trend toward more flexible pricing after years of sticking to $9.99 subscriptions,” Julia Love reports for Reuters.

“The new streaming service, called ‘Amazon Music Unlimited,’ lets users access a vast catalog of songs on demand, similar to Spotify and Apple Music. Subscriptions to play music on the Echo cost $3.99 per month; for access beyond that device, subscriptions cost $7.99 a month for members of Amazon’s Prime shipping and video service and $9.99 for non-members,” Love reports. “Amazon will continue to offer Prime members a limited streaming service for free.”


Amazon Echo

“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,” Love reports. “Streaming services must pay a majority of their revenues to rights holders, a business model that has left Pandora and Spotify struggling to turn a profit. But Amazon can afford to take a loss on music streaming, and the boost to Prime is well worth it, analysts say.

Read more in the full article here.

MacDailyNews Take: Start ’em at $3.99 on the Echo and get them used to having all the music at their beck and call. They’ll be upgrading to $7.99/mo. with Prime or $9.99/mo. before the first year is out.

Smart. Smarter than Apple’s been so far, in fact, which only offers a 3-month trial with a $9.99/mo. take it or leave it proposition.

Amazon will be a major player in music subscriptions.

As we wrote in March:

Something along the lines of Amazon Echo is what Apple should have done if run by competent, forward-thinking management. When Apple finally does do their version of Amazon Echo (and they will get around to doing such a product eventually) they will rightly be called a follower. The company had all of the ingredients to make their own Echo, before Amazon, except for the vision, it seems.

And, as we wrote on June 15th:

There could be a psychological component to this that leads people use Alexa over Siri precisely because they know the Echo is there (it’s a physical object), but forget about Siri being everywhere, even on their wrists (because Siri is embedded inside devices that are “for other things” in the user’s mind (telling time, watching TV, computing, phone calls, etc.) and therefore “hidden” to the user. Hence, Siri gets forgotten and goes unused while people use Alexa…

Again: We believe people use Alexa because Amazon Echo is a physical manifestation of “her,” while forgetting about Siri even though she’s on their wrists at all times and/or in their iPhones and iPads because Siri is hidden inside objects whose primary function is something other than “personal assistant” in people’s minds (watch, TV, phone or tablet, as opposed to “Siri.”) Alexa is present thanks to the Amazon Echo. Siri is absent because she has no such counterpart; no physical manifestation.

Siri is a ghost. Alexa is that cool, fun, glowing tube right there on the counter.

Apple would do well to not discount the psychology behind why people use certain features, even though cold, hard logic tells them it’s a redundant and unnecessary product.

An “Apple Echo” device would sell in the millions of units per quarter and boost Siri usage immensely.

Remember this: Apple’s pockets are deeper than everybody’s combined and in a race of the wallets, Spotify can’t even muster the entry fee.

SEE ALSO:
Apple’s Jimmy Iovine: Here’s what we’re building – October 11, 2016
Apple’s Amazon Echo echo – September 26, 2016
Apple’s Amazon Echo rival said to include includes built-in cameras to read users’ emotions, recognize faces – September 23, 2016
Apple’s Siri-powered Amazon Echo-like device reportedly now in prototype testing – September 23, 2016
Why an ‘Apple Echo’ would be a hit – June 15, 2016
New Apple TV to take on Amazon’s Echo, source says – May 26, 2016
Apple preps Amazon Echo rival, opening up Siri – May 24, 2016
Apple should make a stationary voice command device like Amazon’s Echo – May 19, 2016
Google unveils its Amazon Echo knockoff called ‘Google Home’ – May 18, 2016
Where’s Apple’s answer to Amazon Echo? – March 31, 2016
Amazon Echo leads mindshare in smart home platform war – February 29, 2016
Why did Apple buy a startup whose tech can read emotions via facial recognition?/a> – January 7, 2016
Apple buys Emotient, maker of artificial-intelligence tech that reads emotion by analyzing facial expressions – January 7, 2016

29 Comments

  1. Amazon is a prototypical growth company. Runs at a loss or break even and releases new products and services frequently.
    The market loves these types of companies and that’s why AMZN has a P/E of 208. When Amazon overreaches itself it will crash hard and it will take a lot of the market down with it.
    Personally I prefer companies that look after the bottom line and make real profits. Apple is the best example of that. Not the darling of the stock market at the moment but you know the fundamentals are good.

    1. Maybe though its seems a persistent little ‘basket’. The annoying thing is that MDN is absolutely right Apple should have initiated precisely this in line with their streaming service. Hell they could have given the iPod a real boost in this regard and pretty much pay for any lower subscription model through it and any required base station, or/and through the Apple TV. One criticism I have of Apple these days is that it simply is NOT thinking different enough. Fact is while it was putting all its efforts into talking about TV bundles it could have been thinking about ways of expanding the ATV (and related devices), into precisely this sort of area as well as more integrated Home automation, to make it more relevant all the time and more appealing as a result to customers and TV companies alike. Sorry but Amazon have been far more insightful and nimble on this one, and they should not have been as Apple had all the ingredients there but sat on the bigger concept involved to make the most of it.

          1. I think you mean their fork of Android, Fire OS. They make more profit from their OS than directly sales of the Fire devices. Those Amazon Echos, Fire tablets, Fire TV/sticks are doing their job of selling the Prime service and all the associated media as well as acting as the direct link to selling all kinds of other physical products with delivery to your door. Tying all these media services as benefits to the main Prime subscription is pure genius. It even helps that with Apps you can ‘try’ them in a browser before you even download them to your Fire device.

    2. I agree that Amazon will fall pretty hard if they over-reach but if you look at how strong their foundation is in controlling practically every part of their logistics, running their own datacenters that even other companies including Apple depend on and their policy of making new core business tech work and is used internally before selling that same tech to other businesses, I have a hard time seeing Amazon overreaching for a long time. When viewed with a larger perspective outside of the consumer tech space, Amazon feels like a much more stable company than Apple at this point.

  2. The midget Bezo’s biz model is to operate as a loss leader until the brink and mortars are out of biz. Apparently investors are ok with this and don’t mind the crazy valuations and no profit. No surprise they’d give away music likely at a loss just to grab market share…again without showing a profit I’m guessing.

  3. Does anybody know what sort of deal the artists and content owners are getting from this arrangement?

    It’s one thing selling music cheaply if you already own it, but it’s quite another thing to cheaply sell somebody else’s music.

        1. Who knows. But if you consider that you might get more plays overall, the resulting payment from Amazon may actually not be much different from competing services. The Echo and Echo Dot are well positioned for this.

  4. Amazon as noted likes to be a loss leader, sometimes it works, sort of it seems, and sometimes it doesn’t. (Amazon Phone. wonder who still has one of those)

    However, many people don’t use Prime because they don;t use Amazon enough for orders, and don’t use Prime Video because they have Netflix and don’t want or need another streaming service, or their streamer doesn’t support Amazon, and because either Amazon or Apple can’t get over something to get an Amazon App on Apple TV.

    Many people aren’t going to order an Echo or Alexa just to listen to music… We shall see where this goes

    1. I agree, people don’t get Amazon Prime for any single benefit but the lure of all the services and benefits that you do get in the package. At $99/year the video streaming service alone is comparable to Netflix. Add to that free shipping (especially to Hawaii and Alaska), association with other services like Twitch (Twitch Prime), and the convenience of shopping at Amazon vs competitors. It is an alluring package. Then you consider that for Students of any age you can get all those benefits at half price ($49/year) with a student Prime account, College campuses would probably have large groups of cost/benefit consumers of Amazon Prime.

  5. I don’t have an Echo but don’t you have to ask it for everything? There are no menus – correct? so do I have to ask for each song how do I create playlists etc? Seems awkward.

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