Amazon has apparently reached agreements with two of the three major labels: Sony Music Entertainment and Warner Music Group. The New York Times reports that the streaming service will not include the music of Universal Music Group.
One industry source told The New York Post that the music industry was behind the idea because it could grow into something much larger: “We wanted to support it. It is a stepping stone. It shows that music is a priority for Amazon.”
Although it won’t have as much music as larger, more focused streaming competitors like Spotify or Pandora, Amazon’s service will be just another way for the company to try to entice people to sign up for its $US99 Prime service. Prime members tend to spend almost double what non-members do on Amazon, so it’s in the company’s favour to make the two-day free shipping service as attractive as possible.
Music streaming is becoming increasingly competitive. Apple just bought Beats for $US3.2 billion in part because of its subscription music streaming service. iTunes downloads have suffered as people have turned to apps like Pandora to stream music for free. Pandora is on track to have $US1 billion in revenues annual. Spotify has perhaps $US1.2 billion in revenues. There are rumours that Google was thinking of buying Songza.
Amazon has also recently been beefing up its video streaming content. Selling digital content — be it movies, television shows, books, or music — instead of its physical counterparts, lets the company save money in storage and shipping.
This move also makes sense now because Amazon is likely releasing its own smartphone next week. BGR reported in April that the company is planning to offer a unique wireless data plan, called Prime Data. Although BGR’s sources couldn’t confirm exact details, it’s speculated that Prime Data could take advantage of AT&T’s “sponsored data plan” to let phone owners use various Prime-branded services — like TV and movies from Prime Instant Video and music from this s soon-to-be-released streaming service — without using up any of their data. For example, listening to music from Amazon’s Prime streaming service wouldn’t count towards the user’s monthly data cap.
BuzzFeed reports that the music service will work across multiple devices, let users play songs as many times as they want, and have some offline capabilities.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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