Amazon Could Launch Its Own Music Streaming Service This Week
Music enthusiasts and web-streaming listeners can expect another player in the busy crowded space of music streaming services. The New York Times reported that Amazon (NASDAQ:AMZN) plans to unveil a music streaming service as early as this week. The service is expected to give members of Amazon Prime free access to thousands of songs without advertising. However, the service reportedly won’t include the majority of new releases, and will also exclude the catalog of the Universal Music Group.
Subscribers to Amazon Prime recently saw their annual membership fee rise from $79 to $99. They receive free shipping, plus access to some movies and television shows. The music streaming service, which could launch as soon as Thursday, will likely give Amazon another perk to market to potential subscribers.
Negotiations for the music streaming service began 12 months ago, but met some resistance from labels and publishers that said that the financial terms Amazon was offering were low. During negotiations, Amazon told small labels that it would be paid for a one-year licensing agreement with shares of a $5 million royalty pool, to be divided according to Amazon’s calculation of market share. Large labels and distributors would receive paid one-time payments in exchange for access to specific titles. The New York Times reports that Amazon initially offered about $25 million in one-time payments, but it’s unclear if that number has changed as a result of negotiations.
Notably, Amazon successfully got two of the three major record labels on board with the new streaming service. Sony (NYSE:SNE) and Warner Music both signed deals with Amazon, but Universal did not. When Amazon’s contracts were rejected by other music publishers, Amazon obtained “compulsory” licenses under federal copyright provisions, which could indicate that its use of the songs may be more limited than originally planned.