The streaming music landscape is about to get a little more fractured, with yet another deep-pocketed tech giant set to enter the field.
Amazon, sources have told Billboard, is in talks to launch an ad-supported music streaming service that could be announced as soon as this week. The company already has a popular channel through which to market the service for free — its line of Echo speakers — and the intent here seems to be to go head-to-head against Spotify.
The latter, of course, offers a free, ad-supported tier in addition to a paid offering. That’s unlike the service generally regarded as Spotify’s closest competitor — Apple Music, which only offers a paid tier with no free option.
Does the world need yet another streaming music service? Maybe, maybe not, but what it would seem to be behind Amazon’s thinking here is a version of the same strategy that’s powered sign-ups to its Prime membership business. Offer benefits that serve as loss leaders, in the service of getting as many people as possible to open their wallet.
In this case, a free music service could be one more benefit that makes Echo devices seem like even more worthwhile buys to a consumer. It could also serve to stunt Spotify’s growth, because having this free option through Amazon might make you less likely to pull the trigger on Spotify’s premium tier. “Might” being the operative word, however, since according to the Billboard report what Amazon is planning here will be a limited offering, compared to the much more comprehensive catalog of music Spotify tries to offer.
Interestingly, we’ve also seen a version of this same fight play out already. Apple’s subscription music service is only a small piece of its corporate empire, generating just a sliver of revenue compared to how much the iPhone means to the company. Yet as we reported earlier this month, Apple Music’s paid subscribers have now surpassed Spotify’s in the US, which may have inspired to take a run at Spotify, as well. Amazon, too, is another tech giant with a huge balance sheet for whom music will represent a comparatively small part of its balance sheet, while Spotify of course lives and dies by the success of its music offering, which is pretty much the entirety of the company.
