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Amazon to launch free music streaming service which might affect Spotify

Amazon recently launched the free music streaming facility last week which is supported by an ad. The service is designed for the owners of the company’s devices that come with Alexa enabled in them. This is similar to the Echo smart speakers. This latest service is pretty similar to that of Amazon Music Streaming Service that is free for its prime members. It offers access to around 2 million songs via the music stations and playlists. The unlimited service for Amazon Music offered by the company comes with a monthly subscription of $7.99 and offers you access to 50+ million songs.

The company now hopes that it could use this service as a method to keep the customers tied with its ecosystem while boosting the advertising ambitions. Now, this new service shall most probably have very little impact on Amazon’s overall market. The company already had an impact on Spotify. The share price of the company dipped around 4 to 5 percent just last week with rumors that Amazon has planned the launch of its music service which hasn’t rebounded as of now.

Now, this is why Spotify shareholders might be a bit concerned. Spotify is the music streaming giant with a total of 207 million active users worldwide that include 96 million paid subscribers. This immensely popular service comes with a rigid product offering that might seem a bit bulletproof to the competition laid out by Amazon at the given point. This is especially true given the fact that Amazon has just started dabbling into the services for music streaming. However, there are a few reasons that Spotify investors need to take note of the recent move by Amazon.

Spotify uses its ad-supported service that is free for the users as a method to introduce the users to things that they might avail when they sign up for the paid services. For the Alexa users, the e-commerce giant Amazon might keep a section of the segment comprised of music streamers devoid of even considering to try out Spotify. This would eventually cut off the inroad subscribers.

As of now, Amazon has currently limited the ad-supported streaming service for music to the devices with Alexa-enabled. However, nothing can stop them from jumping in to aid the smartphone users as well. If Amazon takes note that providing free music services to its non-prime members over a smartphone is a great way to draw more users to its ecosystem, the company can easily expand its services.

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