March 13, 2014
Insiders say that Amazon is hoping to introduce an on-demand music-streaming service for its growing number of Amazon Prime customers. While the company has negotiated with record companies and music publishers in regards to licensing, financial terms are said to remain an obstacle. The music service is expected to be one of several new possible features the company may bundle with Prime as it raises the annual membership fee from $79 to as much as $119. Amazon already announced a $20 increase to take effect in April.
“The music industry doesn’t want a free service that would compete directly with paid subscription services like Spotify AB, Beats Music and Google Inc.’s All Access, which offer unlimited access to 20-million-plus song catalogs for about $10 a month and represent a fast growing chunk of record companies’ income,” reports The Wall Street Journal. “Instead, Amazon’s planned offering would be similar in its aim to Apple Inc.’s iTunes Radio, which serves up music based on a users’ input, like Pandora, but features prominent ‘Buy’ buttons.”
Amazon has reportedly told some music companies that it would include time limits with its service regarding how long a customer could listen to a song or album.
Various reports indicate Amazon has offered record labels a total of between $20 million and $30 million. For those reporting the higher amount, $25 million is said to be divided among Universal Music Group, Sony Music Entertainment and Warner Music Group, with the remaining $5 million to be set aside for indie labels.
“Amazon plans to offer music publishers — who hold the rights to compositions, as distinct from recordings — 21 percent of what record companies receive,” explains WSJ. “On-demand streaming companies like Spotify and Rdio use that same rate, in conjunction with other variables, to determine what they pay in publishing royalties, while Internet radio services, which offer a non-interactive experience, pay lower rates. Pandora, for example, pays publishers about 7 percent of what it pays record labels, though that percentage varies significantly according to Pandora’s revenue and number of plays.”
Today, CNET reports that Amazon is raising its membership fee for Prime by $20 to $99 a year. Amazon Student Prime will increase $10 to $49 a year, while the Prime Fresh membership fee will remain at $299.
“Prime members will pay the higher fee when their accounts come up for renewal,” notes the article. “The critical cut-off date is April 17. If your renewal comes up before then, you’ll still pay the original $79 fee. If comes up on April 17 or after, you’re stuck with the higher fee.”
Amazon has additional information regarding the membership fee changes on its Help page.