E-commerce giant Amazon is planning a streaming music service of its own in order to join the ranks of virtually every other tech company in existence, according to the New York Times. The streaming feature would give Amazon Prime subscribers free access to a library of thousands of songs, sans any advertising. It won’t include new releases, however, and Universal Music Group artists will be left out, according to the report.
Those are big conditions on a streaming service, especially if it’s designed to go toe-to-toe with the likes of Rdio, Spotify and the just-acquired Beats Music, all of which include Universal Music Group, all of which offer new releases (though some are occasionally omitted), and all of which offer millions, not thousands of songs. But Amazon doesn’t have to compete directly with these services; instead, its streaming offering will likely operate as an add-on incentive for Prime subscribers.
Amazon recently increased the price of an annual Prime subscription from $79 to $99. The price increase comes with expanded offerings, however, including HBO titles available to Amazon Prime Instant Video users.
The reason Amazon’s streaming service will be more limited is said to be due to a failure to come to terms in licensing negotiations, since the music companies considered Amazon’s rate offerings too low. The financials for Amazon included the opportunity to share in a $5 million royalty pool for smaller labels, and larger one-time payments for big publishers like Sony and Warner Music, in exchange for a year of access rights. It isn’t clear what the final cost to Amazon for licensing fees ended up being.
Amazon currently has somewhere around 20 million Prime subscribers according to the company’s own statement from late last year. It’s a big-margin business for Amazon, so growing that segment makes a lot of sense, and small incentives can help the overall package look far more enticing, even if viewed in direct comparison to other paid streaming services, Amazon’s doesn’t sound like it will stack up all too well.