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[8 comments]

Is Amazon's new music service primed for success?

June 13, 2014

When Amazon.com announced it was raising the price of an annual Prime membership from $79 to $99 back in March, many wondered whether the e-tailer would lose large numbers of subscribers as result. While that question has not yet been answered, Amazon has given members another reason to stay put with Prime Music — a new ad-free streaming music service that comes at no additional cost with their membership.

"When Prime launched nine years ago, the program offered Free Two-Day Shipping on one million items," said Jeff Bezos, Amazon founder and CEO, in a statement. "Today, that selection has grown to over 20 million items. Prime Instant Video now offers unlimited streaming of more than 40,000 movies and TV episodes, up from 5,000 at launch three years ago. And the Kindle Owners' Lending Library now features more than half a million books to borrow for free.

"Today we're introducing Prime Music — more than a million songs from some of music's best artists, plus hundreds of expert-programmed Prime Playlists, all at no additional cost. Prime Music is the latest great addition for Prime members and we think they're going to love it."

While other streaming music services such as Spotify, Pandora and Beats Music (owned by Apple) promote new releases, Amazon is going to wait several months after music has debuted before adding it to the service, reports Bloomberg News.

One snag in the announcement for Amazon is the news that Universal Music Group, which includes artists Kanye West and Lady Gaga, is not yet participating in the program. According to reports, the label was not satisfied with the lump sum Amazon offered for access to its catalog.

Amazon Prime members can listen to the service today at www.primemusic.com. Eligible customers who are not already Prime members can try Prime Music with a 30-day free trial of Amazon Prime by visiting www.amazon.com/prime.

FINANCIALS:     [NASDAQ:AMZN] [ ]

Discussion Questions:

Will Prime Music help assure that members will stay with the service despite the increased annual subscription fee? Will it be a draw for new subscribers?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Will Amazon's Prime Music be more important for keeping existing subscribers or attracting new ones?

Comments:

This is a tough one. It seems as though streaming/curated music is becoming a commodity. It's free with iTunes, free (with ads) with Spotify and then in some cities there is the 'radio' (not in Miami ... for some reason, we have awful radio stations, but I can stream other stations anyway).

I downloaded the player, and it's a cross between Spotify (it grabs your own library to go along with its stuff) and Pandora, sort of. I also found the interface a bit confusing.

I don't see it as differentiating at all, but my demographic may have more choices than others.

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Paula Rosenblum, Managing Partner, RSR Research

First of all, let's be serious! No Gaga? I'm canceling my Prime membership today! There, now I feel better. Sorry, I was having a Kanye moment.

Seriously, if anything it will function better as a draw to new subscribers than a balm to existing customers.

Why?

Because heavy users (including me) easily pay for the membership through savings already, so a $20 increase isn't all that noticeable, especially when you consider the alternative cost of paying as you go.

Methinks, though, that Amazon may have something else up its digital sleeve. If $20 is a make it or break it point to a customer, music streaming isn't going to change their minds.

So ... what else is Amazon trying to slip in here? Stay tuned.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

Prime Music looks to be another good value-add to the movies, TV shows and books already available to Prime membersa rounding out of the extensive library of free entertainment choices. For those Prime members who utilize these options, the addition of streaming music will likely help with member retention. For that subset of Prime members who have no interest in the media options and just want the free shipping, it won't make any difference.

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Jeff Hall, President, Second To None

It's hard to say whether Prime Music is meant to retain Prime customers (at the higher annual fee), or whether Amazon simply feels it needs to compete in this increasingly crowded and competitive space. After the Apple acquisition of Beats, it will be interesting to see whether other consolidation happens in the music streaming business. Maybe Pandora or Spotify could be great takeover targets for a one-stop destination like Amazon.

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Dick Seesel, Principal, Retailing In Focus LLC

Prime Music is another benefit of Prime membership. Not all consumers are equal participants in all aspects of Prime membership. However, offering a variety of benefits increases the chance that a variety of people will find value in Prime membership and either sign up or stay as members. A lot of interested people may try the free 30-day trial. If they find value in the service they will pay to remain as members. If Amazon has made this decision based upon an understanding of how many people who are not now members would be interested in this service, then it will work.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Prime is already a good deal. I will take it at $79, $99 or $129, and I don't even stream movies or music or anything else. It makes shopping easier. It makes decisions easier. It makes my life easier. I start at Amazon. If I find what I need, I am done, and I do it because of Prime.

Yes, this will draw new users, and for those who stream, they can eliminate other alternatives. Great move by Bezos. Are we getting tired of saying that?

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Gene Detroyer, Professor, Independent

I don't think adding streaming music is going to overwhelmingly attract new customers or retain existing ones. But the approach by Amazon to continue to add value to the Prime membership is a smart move. It's just one more offering in the ever broadening Prime service, making a good deal even better.

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Brian Numainville, Principal, The Retail Feedback Group

Amazon has so many ingredients in the Prime soup that they may be on the verge of confusing their target market. Are they a discount delivery service, music service, video service, etc.? The core value of Prime may be lost.

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Larry Negrich, Vice President, Marketing, nGage Labs

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