Amazon’s streaming music faces barriers in cost, limited catalog
June 13, 2014
Amazon seeks to broaden the appeal of its Prime service by offering streaming music as part of a paid-for, multi-entertainment bundle under one annual-subscription umbrella free of advertisement interruption.
Included in the yearly $99 Prime membership, the new feature permits users to download or stream from a library of over one million songs without fees or interruptions, though it falls short of rivals such as Beats Music, Spotify, and Pandora, who offer more than 20 million songs collectively. Paid-for streaming music for higher-end users, and advert-funded streaming music for lower-end users, will continue to co-exist for the foreseeable future.
“Amazon will bring a user-friendly interface to the mobile streaming-music landscape,” said Neil Mawson, executive director, global wireless practice, Strategy Analytics Inc., Milton Keynes, England.
“However, Amazon's arguably perceived high subscription fee and limited music catalog will be a barrier to uptake for many U.S. consumers in the near-term.”
Mobile access to music streaming service gives smartphone and tablet users the ability to shuffle through songs on-demand.
Mobile is playing an increasingly bigger role for Amazon along several different avenues such as selling its products and supporting its growing content strategy. Kindle is just one example of how Amazon is taking content seriously, and its own smartphone is expected to debut as early as next week.
Although the freemium perk is meant to support Prime’s favored values such as free two-day shipping, it will not include work from major artists Kanye West or Lady Gaga. Moreover, in some of its negotiations with labels, Amazon will have to wait up to six months after release to acquire a song to its service, while others can be added immediately.
Amazon hopes to attract the more digitally savvy and value-centric consumers, who have managed to find ways to evade advertising efforts on streaming sites by offering them what it claims is a free service with membership.
Listeners of Internet radio are more accepting of ads, while they also remain submissive to the idea that broadcast radio must contain ads. But consumers view streaming services as a different medium which should not have intrusive disruptions.
Repetitive advertising disengages the listener because it reminds them that they are not in control. Authenticity and the illusion of choice is crucial as advertising must be somewhat sensitive to the idea that streaming is an intimate space and attention must be focused on frequency, repetition and tone.
This presents a challenger to marketers as they attempt to make ads more genuine and less bothersome. If streaming sites are designed where listeners cannot avoid ads, it can cause them to completely disengage.
Free is in
With many music-streaming services following freemium and ad-supported models, and the majority of United States adults unwilling to pay to access these services, marketers would be wise to take advantage of this market, according to a report by Forrester Research.
According to the study, 28 percent of U.S. online adults and 17 percent of European online adults stream music on their desktop or mobile phones. Only six percent of U.S. online adults are willing to pay to access streaming online radio services, and 5 percent are willing to pay to access streaming on-demand radio services.
In traditional over-the-air radio, marketers can only roll out blanket campaigns that cannot target specific demographics. With online streaming, however, marketers can measure and target ads in the audio domain. But more and more streaming sites are offering subscription and ad-free services, stunting the potential audio platforms have for marketing.
Samsung’s recent Milk streaming launch is too available for free with no ads or log-in requirements and provides access to 200 radio stations and 13 million songs. It also functions as a jukebox and lets users create custom stations based on artist or genre likes.
Digital music companies pay hefty fees to stream music, and the services often don’t outgrow their costs. Pandora reportedly only started becoming profitable last November, ten years after its initial launch. Though subscription revenues appear costly, they are not enough to cover the cost and must rely on advertising dollars.
Big players like Amazon and Samsung appear to have a solution to consumers’ dilemma, and though weaker than other services, have undoubtedly placed themselves in a prime position to steal customers from premium service providers.
“Streaming music for PCs, tablets and smartphones is the fastest growing segment of the US and global music industry today,” Mr. Mawson said.
“Streaming music is a sticky mobile service for the important youth demographic. The Prime Music service plays well into Amazon's established cloud computing assets.”
Michelle is editorial assistant on Mobile Marketer, New York
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