The Streaming Music Dance Floor's Getting Crowded

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Will the last dot-com juggernaut to enter the music subscription niche plug in the amp? (NASDAQ: AMZN  ) is apparently the latest player angling to cash in on the success that Pandora (NYSE: P  ) and Spotify are having in serving up streaming tunes to consumers hungry for ear candy. Multiple sources are telling The Verge that the online retailer is in the early stages of talking to the major record labels, paving the way for an on-demand service that would be similar to Spotify's platform that has attracted 6 million premium customers worldwide.

"Premium" is the key. Spotify has 24 million active listeners, but the real model here is getting them to pay up. Pandora has struggled badly on that front. It hasn't had a problem growing its active user base to 67.7 million as of last month, but just 13% of its revenue is coming from subscriptions.

Sirius XM Radio (NASDAQ: SIRI  ) , on the other end, doesn't offer a free ride on its fledgling streaming platform. Even Sirius and XM subscribers with receiver-based accounts have to shell out $3.50 a month for access to Sirius XM's growing online features.

It remains to be seen if Amazon's model will be a true premium offering. Amazon has other ways to monetize an on-demand platform. As a leading seller of music downloads, the Seattle-based e-tailer can try to make it back on the sale of individual tracks and albums. A streaming smorgasbord can also be packaged into the popular $79-a-year Amazon Prime loyalty shopping program, as the dot-com darling has done with monthly Kindle rentals and unlimited video streams.

Amazon can also make a streaming offering a cornerstone feature of Kindle Fire, giving the tablet a true differentiator in a niche that's starting to get crowded.

The only thing we know is that Amazon won't be alone. Reports have surfaced that Google (NASDAQ: GOOGL  ) will be rolling out a pair of streaming services through YouTube and Google Play. Apple (NASDAQ: AAPL  ) has been reportedly in negotiations with the major labels since last year, and a recent New York Post update suggests that Apple is trying to secure lower royalty rates than Pandora or Spotify before moving forward with its offering.

The market's going to get crowded. A shakeout will come, but the online giants can't afford to miss out on the trend. Amazon's tendency to absorb short-term pain for long-term gain -- as it has done in marking down its Kindle products so aggressively -- will serve it well.

In the meantime, check out The Motley Fool's new premium report on the company, which will tell you what's driving its growth and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2323486, ~/Articles/ArticleHandler.aspx, 9/30/2016 11:44:52 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:00 PM
AMZN $837.31 Up +8.26 +1.00% CAPS Rating: ****
AAPL $113.05 Up +0.87 +0.78%
Apple CAPS Rating: ****
GOOGL $804.06 Up +1.42 +0.18%
Alphabet (A shares… CAPS Rating: *****
P $14.33 Up +0.19 +1.34%
Pandora Media CAPS Rating: **
SIRI $4.17 Up +0.03 +0.60%
Sirius XM Radio CAPS Rating: **