Music streaming service is getting more competitive. According to a report by Billboard, Amazon is gearing up to release an ad-supported version of Amazon to compete against market leader Spotify. The service may release as soon as next week.
Amazon plans to implement this new service through its Echo speaker. The free tier will have limited catalog music. To obtain licenses for the free music, Amazon has offered to initially pay some record labels per stream, regardless of how much advertising Amazon sells. Amazon can afford to discount music as a loss-leader to support its core business. While market leader Spotify can’t afford that. Spotify already starting to feel the heat after the news release. Their stock already started to fallen by 3.5{7612e6fcd35940926eef5d7bd8f0522b7c050df4dcd15667744be5e37897c111}.
Currently, Spotify is the only major subscription-dependent music streaming service with a free tier. The free tier allows Spotify to attract new paid user in its platform. In free tier, a listener can hear particular albums or artists on demand, though free users can’t control the order of the songs.
Amazon already has almost 20 million Amazon Music consumer due to a low prime subscription price in some countries. Despite this huge customer base, Amazon Music is still a loss leader for the company. But Amazon can afford that as they gain a huge revenue from Amazon Web Service.