Amazon (AMZN) Gearing Up to Take on Apple Music

Amazon and Pandora are almost ready to release their own version of music streaming. They plan to release these before the end of the year giving customers more options.


Good news music lovers! We are about to have additional options to listen to our favorite songs online. Reports say that, Inc. (NASDAQ:AMZN) and Pandora Media Inc (NYSE:P) will be releasing their own music streaming services before the year ends. They look to rival industry frontrunners Apple Music and Spotify including other players like Google Play, Tidal, Deezer, and SoundCloud.

According to the Financial Times, Amazon and Pandora are just ironing out their licensing deals with the world’s largest record labels.  Both companies are looking to price their subscription-based offering at about $9.99. This has been the standard fee followed by the top brands offering the same service.

This move may have been a response to the continuous dwindling number of album sales. Streaming is now more preferred by listeners. Research shows that it is now the leading source of music revenue in the US. It has replaced digital downloading and is currently the industry’s biggest market.

The Recording Industry Association of America reported that the revenues from music streaming providers increased by 29% in 2015. It now covers more than a third of total industry revenues making it one of the biggest profit sources. On the other hand, revenue from physical sales and downloads has been largely affected going down by 10%.

Amazon currently offers individual songs and albums through Amazon Music. Those who subscribe to their more expensive Amazon Prime have access to streaming from Amazon music, playlists, and radio stations for free. However, the options are very few when compared to Spotify and Apple Music.

Last June, Reuters was the first to report about Amazon’s plans to offer their own streaming music service. Just last week, Recode released a post discussing how Amazon is working on an amazing idea to offer a cheaper monthly music service subscription that will be exclusive to users of the Echo-speaker. It is said that the online retail company aims to charge only $5 to those who bought their internet-connected speakers so they can stream music online.

As for Pandora, their services allow people to listen to different ad-supported radio stations for free. Apple Music currently has an advantage as it offers on-demand listening. Moreover, Pandora is only available in the US, Australia, and New Zealand for now. This strategy of playing random and ad-supported content suggest that users are prevented from playing specific songs so Pandora does not need to enter into any licensing agreements with the major record labels.

Earlier this month, Wall Street Journal was the first to discuss in an article that Pandora planned to complete its deals for on-demand streaming. The decision to offer this subscription-based music service was probably a by-product of the company’s acquisition of ‘key assets’ from Rdio in 2015. There is a possibility that Pandora will offer two price tiers as the company is still finalizing the different features of their subscription packages.

Sources say Amazon is looking to launch their music streaming services this September but it may take Pandora a while longer as they aim to debut their own service by this year’s end. Some exciting changes are coming!

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