Amazon is preparing to take on Spotify with a free, ad-supported music streaming service. Spotify, the leader in streaming music service, is already facing threat from Apple Music in the US market and will soon have another established rival to fend off in this competitive space. Amazon already offers music streaming service without any ads as part of its Prime subscription. The new ad-supported service is expected to be different from Amazon Music and will have limitations in terms of music catalog.
In a new report, Billboard notes that the world’s biggest e-retailer plans to market its free music streaming service through Echo, its voice-assistant enabled speakers. The service could debut as early as this week and Amazon has reportedly offered to pay some record labels per stream in order to obtain licenses for the free music. The Seattle-based e-commerce player is reportedly paying music labels regardless of the amount of ads shown on this new streaming music service. The move also highlights Amazon’s growing power in the music industry where it is also a distributor and can thus afford to discount music to support the streaming business.
Amazon currently offers music streaming as a add-on with its Prime subscription, which costs $119 a year in the US and Rs 999 annually in India. While the service is offered as a benefit to get free fast delivery, customers also get access to music and video streaming platforms. In the US, Amazon also offers Amazon Music Unlimited subscription separately for $9.99 per month and reduces the fee to $7.99 for Prime members and $3.99 a month for those who listen only through their Echo smart speakers.
Spotify is the biggest streaming music player which also offers an ad-supported service via its free tier. In its last financial report, Spotify claimed to have a total of 96 million paying subscribers and 116 million free users. The biggest competitor for Spotify so far has been Apple Music, which is estimated to have 56 million paying subscribers and is focused mainly on converting existing iPhone users to paid music subscribers. Amazon, on the other hand, has not disclosed individual users on its services but more than 100 million users already pay for Prime and get the service for free.
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Spotify is already facing increased pressure in a market that it created and brought to the mainstream. The Swedish audio streaming service has lost to Apple Music in the US and has even diverted its focus towards services like podcasts. With Amazon’s free ad-supported music service and its integration with retail and Echo smart speakers, Spotify will have genuine challenge up its sleeve as consumers struggle to understand which service to pay in the digital subscription realm.