Music Business

Amazon Continues Endless Music Streaming Talks, All Signs Report To More Of The Same

Amazon-cloud-music-600x378Re/code's esteemed Peter Kafka is reporting that "sources say" Amazon is in talks with major labels about a streaming music service. Last March The Verge's esteemed Greg Sandoval reported much the same thing. While it can be expected that Amazon would have ongoing discussions, it's hard to tell from random leaks what's really going on. However, "one label source" says Amazon isn't moving forward because they want a much better deal than other services get.

Peter Kafka's "sources" tell him that Amazon is again in talks with major labels about music subscription service possibilities except now they may be connected to Amazon Prime like their streaming video service.

Key point:

"One label source reports that Amazon isn’t close to getting a deal done, because its executives are asking for a substantial discount on the pricing the labels have given to other services, like Spotify, Rhapsody and Beats."

That doesn't sound promising. Hard to see what the incentive for discounted pricing would be.

The other big difference in this current rumor vs. earlier rumors is a possible tie-in to Amazon Prime.

Currently Amazon offers video streaming and sales via individual title. When streaming is offered, you can usually pay for one showing or for a period of time. Many of these titles are also available for no additional charge to Amazon Prime members.

But as Kafka points out, Amazon's Prime-based video streaming hasn't really taken off and potential viewers are often unaware of what's available.

I've been watching movies off and on via my Amazon Prime membership since they were available at no additional charge. The quality of service and available titles is improving but remains fairly dismal compared to Netflix. In addition, they really are bad at surfacing content that might be of interest.

But perhaps more problematic is that as a Prime user I see streaming media as a free bonus. If Amazon raises Prime pricing as they're discussing, it not only makes me have to question its value but suddenly these "freebies" start to look like extras that are raising the price of Prime.

Given Amazon's combination of a willingness to wait and a willingness to lose money in an atmosphere in which major labels suddenly have a lot of options that don't have to include waiting or losing money, it looks like rumors of ongoing talks are set to continue.


Hypebot Senior Contributor Clyde Smith (Twitter/Facebook) is currently relaunching All World Dance. To suggest topics about music tech, DIY music biz or music marketing for Hypebot, contact: clyde(at)fluxresearch(dot)com.

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1 Comment

  1. With the recent addition of Beats Music into the streaming market, I feel this article is informative while providing a personal insight into the potential creation of an Amazon streaming music service. As a graduating senior receiving a degree in music industry with minors in business and accounting, this topic appeals to my main core of studies for its musical implications, while also touching on important marketing and business decision of Amazon. I came upon your article and was immediately surprised to learn that Amazon was considering launching a streaming music service due to the aggressive competition in that market already. Although you cover the current “rumors” around the service, you decline to comment on how effective you feel such a service would be for Amazon in today’s streaming marking, should an agreement go through. Given all of the existing streaming services, do you feel that “Amazon Prime Music” would be able to diversify their product enough to compete in a market that is already saturated with premium services and content? I do agree that bundling this service with their Prime membership would not be an effective marketing strategy, given the relative obscurity of their streaming media service. It does beg the question why Amazon is not highlighting this facet of their membership more forcefully and effectively with their extensive budgets, data, and library of titles.

    As for the financials regarding the situation as a whole, I feel that it is in the record labels’ best interest to reach a deal with Amazon at discount pricing, despite your view to the contrary. While copyright holders may feel like they hold all of the bargaining power in the negotiation, the truth of the matter is that they need to exploit any potential income steams available to them in an industry with consistently falling revenues. By stonewalling Amazon at rates issued to similar services, record companies are effectively prohibiting themselves from turning additional, significant profits. Also, I feel that it is unfair to tag streaming services provided by Amazon as the reason for increased membership fees. Amazon Prime membership prices have not gone up since its beginnings in 2005, despite the economic downturn and increased expenses relating to operating a service like Prime. That having been said, even if these services were the reason for a price increase, it is coming at a huge discount to the member, as comparable video and music streaming services would cost approximately $215 together annually, which is much less than the $20 to $40 rumored increase. Since these “freebies” may not be essential to every Prime member, I agree that grouping these all together without the choice of the consumer alongside a price increase would be problematic and result in the departure of many loyal customers. Instead, do you feel that allowing the members to choose a level of Prime membership with options for the streaming video and/or music service would quell fears of increased membership fees while still providing content to those who want it, as well as much-desired profits to Amazon? While I do not mirror the idea of Marcus Wohlsen that Amazon must create a phone of its own to compete in the market against Google and Apple, I believe that Amazon can find a way to reach an agreement with the record companies to begin implementantion a differentiated and engaging music platform without scaring potential consumers away from their services all together.

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