Amazon Doubles Market Value, Plans to Launch Music Service

Amazon’s growth is impressive — but it still, apparently, does not meet investors’ high expectations. With profits in Prime and Amazon Web Services, the company just delivered the largest quarterly profit in its 20-year history, but its shares plummeted 15 percent in after-hours trading, erasing more than $30 billion in market value. Shareholders were perhaps spooked by a 20.5 percent jump in operating costs, to $34.6 billion. Yet Amazon still out-performed other tech titans, including Alphabet, Apple and Facebook.

According to The Wall Street Journal, Amazon “was one of the big growth stories among technology stocks in 2015, more than doubling its market value to over $300 billion last year.” The company also “passed $100 billion in revenue for the first time in its two-decade history,” a feat that took Walmart 35 years to achieve.

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Amazon has racked up success in retail, with its $99/year Prime Unlimited shipping program and the lucrative Amazon Web Services (AWS) unit, which rents computing power to other companies. AWS just achieved a 60 percent leap in sales to $2.4 billion, with an operating profit nearly tripled to $687 million.

The company has redoubled its efforts to improve services by building out new warehouses to speed deliveries, and debuting on-hour and same-day delivery in an increasing number of cities. Thirty-minute delivery via drone is also in the offing. The company is also testing leasing cargo planes and hiring citizen drivers to deliver merchandise in some cities. Amazon also claims to be the No. 2 seller of digital music in the U.S., but the company, along with Apple, is seeing declines in the digital track download arena.

The New York Post also reports that, in the fall, Amazon is getting ready to debut a “full-blown subscription music service that would ape Spotify and Apple Music… the latest attempt by Amazon chief executive Jeff Bezos to become the premier distributor of entertainment content from books to TV and movies to music.”

Amazon VP of digital music Steve Boom is leading the subscription service initiative, which will offer more music than what is now available on Prime. Business Insider offers a guess as to why Amazon is taking this step: Although Prime Music’s million-song catalogue has “fallen short of services like Spotify and Apple Music,” Amazon released Q4 data showing that, “even with its Swiss cheese catalogue, the service is gaining momentum,” with music streaming hours more than tripling compared to the same quarter a year ago.

Although Prime Music is free with a Prime subscription, the new streaming music service would have a monthly fee; sources told The Post that Amazon is considering a $9.99-per-month fee, possibly with a discount of $3-to-$4/month if bundled with Echo. “The music industry wants to see all the tech giants fighting it out to try and really take streaming to the mainstream,” one music industry insider said.