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Amazon undercuts Spotify & Apple Music with bundled streaming

Prime Music comes with other services such as free two-day shipping and Instant Video.

By Alexander Sword

Amazon has entered the UK music streaming fray with Prime Music, a service available to Amazon Prime members.

The online retailer announced the launch on Twitter, with the service immediately available as a bundle with other Prime services such as free two-day shipping and Instant Video.

Prime Music will provide a similar service to players such as Spotify, Deezer and the more recently launched Apple Music, available on Amazon’s own devices as well as both iOS and Android devices.

With Amazon Prime membership available for £79 a year, Amazon is significantly undercutting the costs of competitors. Spotify currently charges £9.99 per month for its subscription service, as does Apple Music. The low-cost streaming service, Pandora, left the UK in 2008, citing high royalty fees.

Amazon falls down on catalogue, however, as while the new service claims to offer "over 1 million songs"; Spotify and Apple Music both offer over 30 million.

Martin Garner, Senior vice president, Internet, at CCS Insight, argues that this limitation makes Prime Music an addition to Prime rather than a tempting offering in its own right.

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"Once you sign up to Prime you tend to spend more," comments Garner. "This is increasing the value of the bundle.

"If we look at the music service itself, it’s quite an attractive deal. The only issue is it’s quite a different service [to Spotify and Apple Music]."

Garner adds that the low track count "could limit its appeal", stating that it "will tend to be value added to Amazon Prime".

This compares, he argues, to the video service which stands up on its own right.

"The Amazon Prime Music Launch comes as no surprise, as it makes sense for Amazon’s business model to add music to their current video service," added Andrew Hill, Founder and Chief Executive of I Like Music.

"It’s important with Amazon’s dominance as a key retailer in the UK, to be seen to be competing with other big players in the consumer streaming services market," Hill continued. "It will be disappointing for Amazon to launch without so many key Universal Music artists on board, which no doubt, will be resolved in time.

"Apple originally started iTunes so that we all bought more iPods, iPhones and iPads etc. Amazon have Amazon Prime so that we buy more physical products from their growing stores and the video and now music services are an added extra for their customers.

According to the International Federation for the Phonographic Industry (IFPI), 2014 was the first year that saw the industry taking the same proportion of revenues from digital channels as physical format sales, at 46 percent.

While revenues from downloads globally fell by 8 percent in 2014, streaming services are seeing sustained growth. The IFPI estimates 41 million people paid for music subscription services in 2014, a fivefold increase since 2010. In addition, revenues had grown by 39 percent in 2014 and grew consistently across major markets.

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