When it comes to downloads and sales of music, Amazon is the big
kid on the block. The e-commerce titan will need to use its elbows,
though, if it hopes to succeed in the increasingly competitive niche of
music streaming.
Amazon Prime Music debuted in the US more than a
year ago, came to the UK over the summer and landed in Germany this
month. The ad-free streaming service, included in the $99 Prime annual
subscription best known for two-day, free shipping, is certainly cheaper
than its rivals. Apple Music, Spotify and Google Play Music offer
ad-free streaming for $10 a month.
Like Apple, Amazon was late to streaming for a company with so much know-how in music sales. But don't tell that to Steve Boom.
"We got in at the right time," said Boom, vice president of digital
music at Seattle-based Amazon. "Obviously we've been in the business for
over 15 years. We have a first-row seat at exactly what people's music
purchasing behaviors had been."
That's just one of many factors that Boom lists as helpful for Amazon in the scrum of music streaming.
Here is an edited excerpt of CNET's conversation with Amazon's music chief earlier this month in London:
Q: You've said every streaming service has a very focused rationale. What is Prime Music's?
Boom: When we decided to go into streaming, we spent a lot of time
doing research with customers on what it is that they want. And not
surprisingly, the first thing everybody wants is access to a lot of
great music. But we also found that while they want access to a lot of
great music, a substantial majority of people are not willing to pay £10
per month, £120 a year [in the UK, or $10 per month, $120 per year in
the US].
There are a lot of ads. Maybe more importantly than the ads, the
mobile phone is the No. 1 listening device for digital music, and the
free streaming services do not give you full access on your phone and do
not even let you take it offline, which is super important because the
plans are expensive.
With Prime Music we wanted to address the
customer who loves music, wants access to a lot of music, and probably
not the customer who used to spend [hundreds of pounds or dollars] a
year on music and needs access to every single thing. But they want to
enjoy music without all the interruptions. And so that's what Prime
Music is.
Many streaming services offer a free trial as a gateway to premium membership. Is that something you'd consider?
Boom: We never rule anything out from the start. As a company we're
very focused on listening to our customers. People had been asking us to
put music into Amazon Prime for quite some time. There were a number of
people who said "finally" or "I've been waiting for this. Thank you,
Amazon." And it's still really early days.
It has already
established itself in three months here in the UK, in 16, 17 months now
in the US, as one of the top premium streaming services. Right now we
are really comfortable with that strategy.
Why did it take you so long to enter the streaming market, when selling music gave you a head start?
Boom: You're right, we've been in digital music and we've been on a
kind of a path of evolution for Amazon from being a retailer of music to
being a music service. We came in with a service that's different, and that's probably
the most important thing. The rapid adoption by our Prime members says
it was the right move...and yet we're still just scratching the surface.
People ask me, what's your biggest challenge? Sometimes it's actually
letting Prime members know that this exists.
So how do you do that?
Boom: We have this amazing marketing channel called Amazon, and you
know, there is actually a quite good symbiotic relationship between
video and music in this regard. What we have found is that, as people
realize that they have digital-media benefits in addition to their
e-commerce benefits -- once they get over that hurdle -- they're much
more likely to then consume the other service. If they try music first,
they're more likely to try video, and vice versa. So it's actually super
helpful for us to have multiple services that allow us to cross-market.
Apple
is really the only company that rivals you in terms of offering
streaming and downloads as part of the same service. Is Apple Music your
biggest foe? Boom: We're just very different. One of the
really interesting things about all of the other services is when they
market a new release, it looks like how we used to market a new release.
They market it to people using their music service, which is great,
because it gets people that listen to their music. But Amazon has a much
broader platform.
We have ... globally over 200 million
customers coming to Amazon sites. Many of them are not using music from
Amazon. And so what we're doing is actually marketing that release to
everybody on Amazon, and that's way different.
You come to the
home page, Amazon, it's an e-commerce site. You might be going to shop
for a new tablet, you might be going to shop for laundry detergent,
garden furniture or a new record, videos, and you're going to see this
promotion. That's pretty powerful.
Has Prime Music strengthened the Prime package to the extent that people are joining Prime just because of it?
Boom: Our primary focus with Prime Music right now is not becoming a
Prime member, but more on staying a Prime member. Like I said, we're
going after the type of customer that wants access to lots of music and
great functionality, but doesn't necessarily want to spend a ton of
money on music every year.
What we're really focused on is getting them to say wow, Prime just
got more valuable. When it comes time for my renewal, I'm that much more
likely to. That's been our primary focus, and it's working. Every time
we add a new benefit to Prime we do see that jump in our members where
they tend to stay more engaged in our service.
Is there any chance Prime's annual fee, which is $99 in the US and £79 in the UK, will change?
Boom: There's always a possibility of that someday. Sometimes shipping
costs go up, and we have seen that in the past. I think we've raised
prices once in the history of buying. That really is not a lot.
Even when we did raise the price, the rate of growth of Prime really
didn't slow and the retention rate stayed pretty much at the same level.
... If the price goes up, it's for good reason, not because we just
whimsically want to raise the price. We wouldn't be adding these types
of services if people weren't using them and loving them.
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