Amazon launches ad-supported music service to Echo owners

Amazon today announced the launch of a free, ad-supported sound service in the U.S. that will be available to anyone who wants to play free sound on their Echo speaker.

Until today, Echo owners who wanted to stream sound from Amazon could either pay for an annual Prime membership for access to Prime sound or they could pay $3.99 per month to stream from Amazon sound Unlimited (or $9.99/month to stream on non-Echo devices, as well.)

The brand-new service has the same catalog as Prime sound, which today has just over two million songs. Amazon sound Unlimited, meanwhile, has 50 million songs.

The brand-new service gives Echo owners a path to enjoy free sound from Amazon on their Echo, instead of having to turn to a third-party free provider, like Spotify or Pandora. It will also offer a path to push Echo owners to enhance to the paid subscription services Amazon offers, including its Amazon sound Unlimited service and even Prime itself.

Amazon’s plans to wade into the free streaming mart and more directly challenge with Spotify had been previously leaked by Bloomberg. The report noted that Amazon had been in discussions with the labels in order to obtain the licenses to stream the free sound — something it agreed to pay for, regardless of how much advertising it sells.

In addition to being a differentiating and attractive feature for potential smart speaker buyers — something that could have them opt for an echo over a google Home appliance or Apple HomePod, for instance — the service also offers Amazon a brand-new path to monetize its enormous and growing installed base of Echo speakers.

Amazon’s ad revenue was $10.1 billion in 2018, or 4.3 percent of its total revenues, and now it’s looking for brand-new ways to grow that number.

The news also comes on the heels of a 2018 forecast from eMarketer that had predicted Amazon’s share of the smart speaker mart would decline in 2020, as tournament from rivals — including Google Home, Sonos One and Apple HomePod — would heat up. But there’s still plenty of moment for that to change.

The mart for smart speakers knocked
critical mass in 2018, with around 41 percent of U.S. consumers now owning a voice-activated speaker. Amazon also said at the beginning of the year that more than 100 million Alexa-powered devices have been sold to date — but this number includes non-Echo devices, including those from third-party manufacturers.

The launch of a free sound service will be a significant blow to Spotify which, before now, was the top subscription sound streaming service with a free tier. The free customers often then convert to paid subscribers as they use the service over moment, something that has helped Spotify grow to approach 96 million paid users and 116 million free users. Apple sound has 56 million paying subscribers, but no free funnel.


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