Amazon.com Inc. has joined the hotly contested online music streaming business by launching its own service that is free of ads but light on songs.
Prime Music is available free for subscribers of Amazon Prime, the company’s $99-a-year membership program that includes free two-day shipping, a digital books lending library and video streaming of movies and TV episodes.
Amazon launched Prime Music on Thursday with more than 1 million songs from artists including Beyonce, Britney Spears, John Mayer, Bruce Springsteen, Madonna and Blake Shelton.
Prime Music won’t focus on getting the newest releases, and its music catalog is also relatively small compared with its streaming music rivals. Although it reached licensing deals with Warner Music Group, Sony Music Entertainment and independent labels, Prime Music is notably missing Universal Music Group, the world’s largest music corporation. That means artists including Katy Perry, Taylor Swift and Kanye West won’t appear on Prime Music for now.
The selection is also just a small fraction of what’s available in Amazon’s digital music store, where customers can shop from more than 20 million downloadable songs.
“We’re not claiming to have full coverage at this time,” Steve Boom, Amazon’s vice president of digital music, said in an interview with The Times. He said the Seattle company would add new songs to Prime Music every month.
An Amazon streaming music service had been rumored for months and goes up against similar offerings from Spotify, Pandora, Rhapsody, Google Play Music and Beats Music, which Apple Inc. agreed to purchase in May.
“We don’t view this as a zero-sum game — we think people will continue to listen to multiple music services,” Boom said. “I don’t need them to stop using another service, but to also use my service.”
Because of its limited catalog, Prime Music isn’t expected to shake up the industry or appeal to hardcore music users. Spotify, for instance, has more than 20 million songs and adds 20,000 more a day.
“It’s too light of an offering to get people very excited about,” said Michael Pachter, an analyst at Wedbush Securities. “Nobody’s going to stop being a subscriber to Rhapsody or Spotify because of this offering. I think it’s a nice value add for Prime members, but Prime members tend to join Prime because they want free shipping, not because they are looking for multimedia.”
Still, its virtually free cost (for people who are already Amazon Prime members) and Amazon’s wide reach is likely to help Prime Music become popular among casual music consumers, especially those who have yet to try music streaming.
The addition of Prime Music should also mollify some Amazon Prime subscribers who were upset when the online giant raised the price of a one-year subscription to $99 from $79 in March. And it could entice others to join the membership program, which would be a big win for Amazon because Amazon Prime members spend significantly more on the site than non-Prime shoppers.
Prime Music has a number of features that Amazon hopes will set it apart from the competition. The service will be ad-free, a benefit typically reserved on other music services for users who pay a premium.
Users will also get unlimited streaming and can choose which songs and albums to listen to, or rely on Amazon’s pre-programmed playlists and personalized recommendations. They can download songs free from the catalog to their mobile devices for offline playback.
“You’ve got to like Amazon’s strategy of getting into the game, not overpaying for things in the beginning and letting customers get involved,” said Colin Gillis, an analyst at BGC Financial. “For a lot of people, it’s a nice little perk.”
It’s unclear whether Prime Music will cannibalize Amazon’s music sales of digital MP3s and physical CDs. Amazon, which reported first-quarter revenue of $19.74 billion, a 23% year-over-year increase, does not break out sales by category.
“There are millions of people who want to buy and own music; there are also people that don’t want to buy and own music. It’s going to vary so widely,” Boom said. “We won’t know the answer to that question until months after and we see how consumers are reacting.”
Shares of Amazon fell $9.29, or 2.8%, to $325.91 on Thursday.
Kindle Fire HD and HDX devices will receive Prime Music in an automatic, over-the-air update. Android and iOS customers can download or upgrade to the latest Amazon Music app. Prime members in the U.S. can also listen to Prime Music through a Web browser.
Since its inception nine years ago, Amazon Prime has grown to include tens of millions of subscribers (Amazon has never released a specific membership figure).
Although it began as a way for shoppers to receive unlimited free two-day shipping, the program expanded over the years to include access to more than 500,000 books to borrow free from the Kindle Owners’ Lending Library and free streaming of more than 40,000 movies and TV episodes through Prime Instant Video — although analysts estimate that Netflix’s vault of content is significantly larger than Amazon’s.
Eligible customers who are not already Prime members can try Prime Music with a 30-day free trial of Amazon Prime.
Amazon has another big announcement coming up. It recently sent out media invites for an event in Seattle on June 18 — widely expected to be the unveiling of an Amazon smartphone.
A smartphone could raise interesting possibilities for Amazon by bridging together its various entities: shopping, e-books, movies, TV shows and now streaming music, Gillis said.
“By building these platforms, they’re able to lock you into their ecosystems,” he said. “Now they have all the boxes checked.”