To almost no fanfare, Amazon (AMZN) Prime members awoke this morning to discover a new streaming music service. Called Prime Music, the service is available for no additional charge to Prime members and offers about one million songs, according to the company. What users won’t find is music from Universal Music Group, the largest label, or fresh songs from Warner and Sony (SNE).
Amazon Prime users (who pay $99 a year for Amazon Prime and its suite of services) also won’t find advertising, a welcome distinction from competing free offerings from Spotify and Pandora (P).
As I discuss with Jon Najarian of optionMonster in the attached video, Amazon’s Prime Music isn’t meant to destroy other music services. It’s simply yet another add-on product to flesh out the user experience. Between Music, cloud offerings, a new hardware device next week and a potential payment system, Amazon is trying to eliminate any reason customers would have for leaving the Amazon ecosystem.
“I don’t think most people who are Prime members really care that much about this addition,” says Najarian, “It’s a little bit of an enhancement”.
What’s in it for Amazon? Marketing information.
What makes the service worth Amazon’s time is that it gets to know you better as a customer. The music you listen to tells Amazon a lot about what other products you might be interested in, particularly in combination. A customer streaming kid-friendly pop and classic rock is probably a parent, for instance. That bit of knowledge opens all kinds of doors for other product suggestions from clothing to books to hardware.
There’s a fight going on between Amazon, Apple (AAPL), Google (GOOGL) and Facebook (FB), and the action is heating up by the day. All of the companies are finally looking to make money off of all the information they’ve been collecting off you for years. Because customers already trust Amazon and Apple with their credit card information it’s easy for those two companies in particular to take the next step and allow you to buy products from other retailers and monthly services using the “one click” option that’s already become second nature for people buying books and apps.
Privacy concerns aside, handing over more of your data in exchange for making your life just a little easier will be a compelling trade for most consumers. With Prime Music, Amazon is giving customers yet another reason to settle in and get cozy with the idea of Amazon being the central hub of their whole existence.
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