Amazon (AMZN) thrives on disruption.
The company upended the publishing industry and recently drove Sony (SNE) out of the e-book business in North America. Its Kindle Fire helped usher in the age of cheap and small Android tablets — forcing Apple (AAPL) to change its iPad strategy (no small feat). It has done a number not just on brick and mortar bookstores, but the entire retail sector.
Amazon took Google’s (GOOG) Android operating system, turned it into its own Fire OS and locked Kindle tablet owners out of Google Play, subverting Google’s “give it away to win market share” strategy. The anticipated arrival of an Amazon set top box for the living room is threatening everything from the Apple TV to Microsoft’s (MSFT) Xbox One.
And now, rumblings have Amazon streaming music as yet another AMZN disruption in the works.
This isn’t a re-hash of the Amazon Cloud Player music streaming service introduced in 2011. That product used Amazon’s Cloud Drive to store a user’s digital music purchases online, then let them stream those songs to a connected device.
This Amazon streaming music service would let a user stream any music from Amazon’s catalog for a set monthly fee, without having to pay for individual songs. If the model sounds familiar, it should. That basically describes the core functionality of Pandora (P), Spotify, Rhapsody, Rdio, Google Play Music All Access and Apple’s iTunes Radio.
Having AMZN wade into the market with its own Amazon streaming music service is bad enough for these established players, but what makes the prospect even worse is the possibility that Amazon might give it away for free as a perk with its Prime membership.
There has been considerable speculation about the potential impact that raising its Prime membership fee might have on AMZN. Consumers love free stuff, and if that Prime membership were to be sweetened with free access to Amazon streaming music, it’s likely to make a price hike more palatable for customers.