Amazon Music
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Amazon Music will expand its ad-free offering for Prime members from 2 million songs to more than 100 million songs, the company announced on Tuesday (November 1). There is one caveat, however: Prime members can only listen on shuffle, unless they upgrade to Amazon Music Unlimited.
Along with the increased access to music, Amazon announced that Prime members will also have access to a wide-selection of ad-free podcasts, plus a newly launched Podcast Previews feature that lets listeners easily test snippets of episodes to see if they like them.
“When Amazon Music first launched for Prime members, we offered an ad-free catalog of 2 million songs, which was completely unique for music streaming at the time,” Steve Boom, vp of Amazon Music, said in a statement. “We continue… to bring even more entertainment to Prime members, on top of the convenience and value they already enjoy. We can’t wait for members to experience not only a massively expanded catalog of songs, but also the largest selection of ad-free top podcasts anywhere, at no additional cost to their membership.”
This expansion follows the news from April that Amazon Music Unlimited raised its price for Prime subscribers from $7.99 per month to $8.99 (or from $79 per year to $89) and similarly upped the cost of its single-device plan (for Amazon’s Echo and Fire TV devices) from $3.99 to $4.99 per month. Other prominent streaming services recently took similar steps, with YouTube’s Premium Family plan — which includes its music subscription service — jumping from $17.99 to $22.99 per month, and Apple Music individual plans climbing from $9.99 to $10.99.
Amazon launched Prime Music with over one million songs, primarily catalog material, in 2014. Two years later, the company rolled out a multi-tiered offering, Amazon Music Unlimited, with many more titles.
“From our perspective, with Prime we helped push the music industry away from the one-size-fits all approach to music streaming, and to go after different customer segments,” Boom told Billboard at the time. “We’re going to grow the market [and add] new customers to streaming with a great way to get into streaming with really low friction.”
In 2020, Amazon said it had “more than 55 million” subscribers across its various listening tiers.
Universal Music Group, Hipgnosis Songs Fund and other music stocks got a much-needed boost on Tuesday (Oct. 25) following news of Apple Music’s price hike, as investors bet it would trigger a wave of streaming subscription cost increases.
Universal Music Group’s stock closed 11.6% higher, Hipgnosis Songs Fund Ltd ended up 7.8% and Korean music companies SM Entertainment and HYBE finished the trading day 4.8% and 4.4% higher, respectfully, on Tuesday. On Monday, Apple announced that it was raising the standard U.S. and U.K. individual plan price to $10.99 from $9.99.
This 10% price hike — Apple’s first — comes amid high inflation and a darkening economic environment in many global markets. If Apple can raise prices at a time like this, that is a sign the music industry can charge more without turning off consumers, Wall Street analysts said.
“We see this as a further signal of the stickiness of music streaming subscriptions even in a weaker macro environment and believe the major markets will be able to absorb higher prices without leading to meaningfully higher churn,” Lisa Yang, Goldman Sachs’s head of European media & internet technology equity research, wrote in a note to investors on Tuesday.
“We believe that other major DSPs will likely follow suit with similar price increases in the near future, implying further potential upside to our music industry forecasts.”
Competitors Spotify and Amazon Music have already raised prices in some markets. Amazon Music raised the price of its unlimited individual plan for Prime members to $8.99 from $7.99 earlier this year.
Spotify, which will report earnings later Tuesday, raised the cost of its individual plans in the Nordics in 2021, although its standard plan for U.S. subscribers remains at $9.99.
“Despite positive management commentary around churn (with regards to recent price increases on certain plans/regions) as well as management’s views on pricing power over the long term, Spotify has highlighted the broader macro environment as a key consideration in terms of implementing price increases in the near term,” Yang wrote.
Apple’s price increase could also have positive impacts on the majors because companies like UMG and Warner Music Group typically get 65% of music-related revenues from streaming companies with a “high incremental margin,” Goldman estimates.
Music stocks have suffered in 2022 as the major U.S. market indices have fallen around 20% so far this year.
UMG’s share price of 21.10 EUR ($21.01 US) is down nearly 14% year to date, Hipngosis Songs Fund Ltd traded at 91.06 penny sterling ($1.03 US) and is down 28% so far this year. Meanwhile, Warner Music Group’s stock traded at $27.16 US, off almost 37% year to date.