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What Amazon's New $5 Streaming Music Service Means for Its Future

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E-commerce king Amazon.com Inc. (AMZN - Free Report) is reportedly planning to launch a music streaming service exclusively for its Echo devices, and according to Recode, the company is toying with the idea of selling the service for $4 or $5 per month.

This cheap, Echo-based streaming service would be in addition to another music subscription service that would operate like industry leaders Spotify and Apple’s (AAPL - Free Report) Apple Music. For $10 per month, users could access all the music they want to stream, anytime, anywhere. Amazon would provide its users an extensive library of unlimited, ad-free music, and also be able to download songs for offline playback.

Its $5 a month service, however, would be different, and not just because it would be exclusive for Amazon Echo devices. Other than internet radio company Pandora , who offers an ad-free version of its radio streaming service for $4.99 per month, Amazon’s music service would be the only one of its kind on the market.

Majorly, the service would be confined to Amazon Echo devices like the original Echo, the Amazon Tap, and Echo Dot, and it would not be available on mobile phones. “That runs counter to conventional wisdom in the music business, which believes that most people value the ability to take their music with them and play it whenever they want,” Recode writes.

Music streaming, in general, relies heavily on mobile phone usage. Most of Spotify users sign up for the service on their phones, while Apple Music was focused almost entirely on potential subscribers who had iPhones.

While Amazon already offers a music service as part of its Prime membership, its current catalog is sorely lacking, only boasting “more than a million” songs. Prime may be one of the best online shopping tools for consumers out there, but its music service is definitely not what draws users into the membership.

If either of these music streaming services turns out to be a success, Amazon has the potential to dominate almost every facet of the entertainment industry. Just like it has built up its video offerings with critically acclaimed films and television shows, as well as a standalone video streaming service for $9 a month, Amazon’s music streaming service will need the same, if not more, amount of attention in order to prosper.

Both its $5 and $10 a month services could learn a thing or two from its main competitors. Like Tidal, Amazon could partner with high-profile musicians for exclusive single and album releases, and similar to Apple Music, the company could offer an extended free trial, especially for its Echo-based service.

Naturally, if the cheaper music streaming service proves successful, Amazon would see a rise in sales of its Echo products, which already are projected to sell 3 million this year and 10 million in 2017. A music service attached solely to its Echo devices is a unique way for Amazon to expand the appeal of its line of smart speakers, and it just may work.

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