Will Amazon Hurt Pandora, Spotify, and Sirius XM?

Amazon may be rolling out a streaming music service.

Feb 28, 2014 at 9:50AM

Amazon.com (NASDAQ:AMZN) may be ready to pump up the volume when it comes to streaming music services.

Re/code is reporting that the leading online retailer is in talks with the major record labels to roll out an on-demand tunes platform along the lines of Spotify. This may not seem like a lot to get excited about since other tech giants have struggled in trying to make a dent in this market, but we're also talking about Amazon and its cutthroat ways.

Tech giants have tried to charge a premium for their music services, but the clincher here is that Amazon reportedly wants to roll this out later this year as a feature that's included in its wildly popular Amazon Prime loyalty shopper program, where customers pay $79 a year for unlimited two-day shipping of Amazon-warehoused items. They also get monthly Kindle rentals and a growing library of digital video at no additional cost. Tacking on music makes sense, and it could be a game changer for the industry.

Pandora (NYSE:P) and Sirius XM Radio (NASDAQ:SIRI) wouldn't seem to be in Amazon's crosshairs at the moment, but isn't this ultimately a land grab for music buffs? If folks can stream Amazon's eventual service on their mobile devices or Bluetooth-enabled car entertainment systems, won't it eat into Pandora usage and Sirius XM subscriber levels? This would naturally be a bigger threat to the ad-supported free Pandora platform. An Amazon Prime customer who was paying before the music feature was added may view this as a complimentary perk, and commercial-free will trump commercials nearly every time.

Sirius XM is backed by a thicker moat given its proprietary content, but it has never been challenged by an ad-free service that is effectively free for existing Prime shoppers. The market is expanding quickly enough to support many growing companies, but we can only ultimately listen to one platform at a time.

Will Amazon's service see the light of day? Under the current scenario it's unlikely to happen. Labels won't go for it. Why would someone pay Spotify $10 a month if Amazon would cost less even before we get to the rest of Amazon Prime's goodies? Offering music outside of the purchased tunes and digital locker that Amazon presently offers would devalue it, and unlike video, where Amazon can turn to lesser TV shows and older movies, you can't roll out an incomplete music service. 

However, keep in mind that a few weeks ago, we had Amazon pondering bumping the price of Prime to $99 or $119. Introducing the higher rate as it rolls out streaming music would kill two birds with one hike. Customers would see that they're getting something more, and music labels would no longer feel that they were being devalued if they triggered the increase.

Keep an eye -- and one day an ear -- on Amazon. 

Six more companies that are pumping up the volume
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. It recommends Pandora Media and owns shares of Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers