Amazon ramps up music and food services

  • 13/06/2016
Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016.    REUTERS/Mike Segar/File Photo   - RTX2FN3M

Amazon is poised to launch its own music streaming service, at the same time it is eyeing the Australian grocery market.

Reuters reports that Amazon's standalone music service will be offered in the United States at US$9.99 a month. It will compete with the likes of Spotify, Apple Music and Tidal.

The report surfaced as an executive from the company told Fairfax Media that Amazon could launch its fresh and frozen food delivery service, known as Amazon Fresh, in Australia as early as next year.

Amazon's Brittain Ladd told Fairfax that the big supermarket players (Coles and Woolworths) could certainly lose market share.

The music and grocery offerings are part of Amazon's plan to become a one-stop shop for goods and for content.

Amazon Music

Amazon is negotiating licencing deals and wants to launch the service by the end of the northern hemisphere summer or the start of autumn.

Amazon has already had some experience with music streaming. It has been offering some music through its Amazon Prime service.

Prime offers customers in the US two-day shipping, special discounts and video and music content for an annual fee of US$99.

Amazon's standalone music service could be seen as a late arrival to what is already a crowded and competitive space. But it could be seen as a savvy way by Amazon to see what works and what does not.

It's already been offering Amazon Music as part of T-Mobile's Music Freedom data free music streaming program.

The company will also use its music service as a way to promote its Amazon Echo device.

Echo is a speaker that serves as a voice-activated personal assistant. The device can queue and control music devices. It can also order goods for you via Amazon's website.

This what it is all about for Amazon. It wants people to spend more time on its pages and to spend more money buying products from its website.

The standalone music service will be launched as Amazon ramps up its video streaming service.

Video too

Video streaming was initially offered to US and some European customers as part of its Amazon Prime package.

But more recently Amazon has been offering the video service as a standalone product for a monthly fee of US$8.99 a month in the United States.

Amazon does not reveal the numbers of how many subscribers it has, saying only that is in the "tens of millions."

Analysts from Consumer Intelligence Research Partners estimate 54 million people subscribe to Amazon Prime.

That compares to Netflix's 75 million global customers.

It is also estimated the average Prime customer spends around US$1100 with Amazon each year. That is almost twice the amount the typcial customer spends.

Analysts at Bernstein believe Amazon spent US$2 billion on video content last year.

It has the resources to increase that spend, even if the video and streaming services run at as loss for years.

That is something that will be yet another headache for every traditional media company.

The partnership with T-Mobile is also significant. It has not attracted alot of talk. But it could be a sign of where Amazon plans to go, especially in international markets.

Including perhaps here in New Zealand?


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