Amazon’s new music streaming service challenges Apple and Spotify

Amazon.com unveiled a full-fledged music streaming service on Wednesday. Owners of its Amazon Echo speaker can subscribe to the service for as low as $3.99 per month. It fast-tracks the industry trend to more variable pricing after years of sticking to $9.99 subscriptions.

Similar to Apple Music and Spotify, the new streaming service, dubbed “Amazon Music Unlimited”, allow users access a massive catalog of songs on demand. To play music on the Echo, subscriptions cost $3.99 per month. Members of Amazon’s Prime shipping and video service would have to pay $7.99 while non-members’ subscription cost is $9.99 per month. In addition, Prime members will have limited streaming service for free.

Amazon is counting on the Echo to set it apart as it delves deeper into the packed streaming arena. The Echo is a smart speaker that responds to voice commands. It has become a surprise hit since its launch last year. Further, the smart speaker’s release has prodded many to predict that voice will become an essential way users interact with technology.  Music provides the key to the device’s attraction.

Amazon Music vice president Steve Boom said that the company has created an intricate system of voice controls for listening on the Echo. Also, Amazon believes that such smart home devices will be a main source of development for the music industry.

The low price for Amazon’s streaming service is consistent with the company’s standing for challenging the competition. This goes to show that the music industry is beginning to accommodate consumers who are reluctant to $9.99 per month. Label executives have been hesitant to budge on price having seen revenues plunge from the CD era. But they have come under pressure as streaming accounts for majority of the profit.

In a business model that requires streaming services to pay majority of their revenues to rights holders, Pandora and Spotify are straining to turn a profit. Amazon, however, can afford to accept a loss on music streaming, and the support to Prime is well worth it.

Jackdaw research analyst said that the premium music service suggests Amazon will progressively offer basic media options through Prime. At the same time, peddling supplementary subscriptions for customers who want to go deeper.

“It’s just making Prime that much stickier,” he said.

AI as attraction

Amazon is confident that the artificial intelligence will keep users tuned in. The company has incorporated artificial intelligence into the system. Consequently, this makes it possible for consumers to ask for songs that fit a certain mood or search with lyrics.

“You can ask for Michael Jackson by saying, ‘Play music by the King of Pop,’” Amazon Music director Kintan Brahmbhatt said. “It’s smart enough to know that’s what you meant.”

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