Given how successful Amazon Prime is and how much it has been dissected by now, it is rather fascinating how little Amazon’s competitors have to offer in response. Walmart and Jet.com are just the most recent examples of legacy and new competitors struggling to find an answer to Amazon’s unique positioning with its Prime bundle. (I find it hard to believe management at both companies is not aware of the dynamics surrounding Amazon Prime. But that is a of course as well a possible reading of the current market situation.)
CNET offers a look at the often overlooked Amazon Music and how the small music streaming service fits into the bigger picture.
Looked at in isolation, Amazon Prime Music (the on-demand streaming part of Amazon Music belonging to Amazon Prime) is not competitive with Apple Music, Spotify or Deezer. But that is exactly the point (being not isolated but part of the Prime bundle gives Amazon Music a unique position):
[Paul Firth, head of Amazon Music UK,] reckons these casual fans aren’t put off by the relative paucity of Amazon’s catalogue of one million songs. “We sell all of those [tracks] through our MP3 store,” he said, “and we know the vast majority of them don’t sell.”
Spotify, for comparison, offers 30 million tracks but admits that millions have never been played.
Firth pointed out that although the music-streaming service itself is relatively young, Amazon has been selling people music for years as CDs and MP3s. “We know what [customer] tastes are and what they buy,” he said. "Very few of them spend the £120 a year it would require to subscribe to a typical music-streaming service.
“In fact over 70 percent of them spend less than £30 a year,” he said.
Think about that: The annual fee for Amazon Prime is still less expensive than a single subscription to Apple Music et al. This changes the addressable market for Amazon Music rather drastically. (Especially given what Firth says about the average yearly purchase volume of music. It is nothing new that music streaming is too expensive. An opportunity for Amazon Music.)
But more informative is how Amazon Music can be a puzzle piece of something much larger:
“If you’ve bought CDs or MP3s from us in the past 10 years,” explained Firth, “that gives us a lot of history beyond just your first stream. That allows us to tailor things for you early on.” (…) “What Amazon can do for any band,” he said, “is offer them the ability to reach their fans through any medium they want. We can sell your vinyl, we can sell your CDs, we can sell your MP3s.”
And it doesn’t stop there. "We could be selling the book, the t-shirt, the DVD all in one place…With Coldplay we offered a ticket offer so customers who preordered [the album] had 24-hour priority access to [buy tickets for the band’s] tour.
“When you can bring all that together then you’re able to offer something to the industry, to artists, to labels that others can’t,” he said.
That right there is an example of what a consumer facing platform like Amazon can deliver as opposed to what a holding like Rocket Internet or a B2B focused platform provider like Zalando sets out to do.
- Jeff Bezos & The “Flywheel” Metaphor for Amazon Prime and Prime Video
- Study: For Amazon Prime Subscribers in U.S., Video is Mostly an Add-On Benefit
- Why Rocket Internet’s ‘Network Effects Within a Country’ Is a Problematic Strategy
- Zalando’s Platform is, Unfortunately, Closer to Rocket Internet than to Amazon
- How The Prime Cross-Subsidy Model Could Eventually Lead To A Fight between Amazon And DeliveryHero
- No, AWS will not be spun out as a separate company
- A Prime Bundle