Quick Take: Amazon Music Unlimited Comes To The UK

Amazon announced the anticipated launch of Amazon Music Unlimited in the UK today. For my full take on Amazon Music Unlimited see my previous post here.

Make no mistake, Amazon are taking this launch seriously, with a coordinated PR campaign and press release quotes not only from Amazon’s head of streaming music Steve Boom but also from Jeff Bezos himself. So why the big deal? Music is a low revenue, low margin business for Amazon, just as it is for Google and Apple. But that’s not the point. Music always plays a special role for tech companies, sometimes because the CEO is passionate about music, but normally because it is the service off which other things can be hung. Amazon, like Apple, is starting the transition towards becoming a services company. While Amazon has made much more progress on video than Apple has, it has made much less progress than Netflix has. Music is the wide appeal proposition that can be used to get people onto the first rung of the services ladder. Just like the CD got people onto the first rung of Amazon’s ladder back in the 90’s.

Amazon’s approach to streaming music has thee notable assets that stand it apart from the pack:

Targets mainstream music fans: 9.99 AYCE streaming services have drawn most of their users from music aficionados, super fans who like to spend money every month on music and who have the inclination and expertise to lean forward and routinely discover new music. Innovations like Discover Weekly and $1 for 3 months promotions from Spotify have helped broaden appeal but these are tweaks to the model, not revisions. Amazon set its sights on the more mainstream user with Amazon Prime Music, with a smaller, curated catalogue that is free to Prime Users.Pricing innovation: Amazon Music Unlimited changes this focus but still pushes for the mainstream with £7.99 pricing for Prime Users and £3.99 for Echo users. To work really effectively, Amazon will need to create something like a ‘Prime Platinum’ tier with Music Unlimited bundled in, because £79 a year just for music, alongside £79 a year for unlimited free shipping, the 2nd biggest video service on the planet, and free music (via Prime Music) looks a long way from good value when exposed that way. As I previously wrote, whether it is intentional or not, Amazon has created a decoy pricing strategy, making the existing Prime Music offering look like fantastic value in comparison to the £7.99 / £9.99 Unlimited service.Amazon Echo: Voice controlled tech is gaining momentum but it is within the home that it has most relevance. As a voice activated music player Amazon Echo is well positioned to replace the traditional radio in the kitchen. In the UK, as long as TuneIn support continues, I could see it becoming a major challenger for DAB set sales. However, from a music service perspective, the limitations of Prime Music are much more easily exposed on the Echo as the user has full control and is not guided by curated lists, so will frequently request tracks not in the catalogue.

Amazon has the potential to be the sleeping giant of streaming music, but they will need to hope they haven’t napped for too long. Amazon’s pricing and existing customer relationships alone should be enough to ensure a strong degree of success. Add in the Echo and you have genuine market potential.