Inc's Prime Music Is No Threat to Pandora and Apple

Amazon is offering free music to its Prime members. But that shouldn't concern Apple or Pandora.

Jun 16, 2014 at 11:05AM

I'm an Amazon (NASDAQ:AMZN) Prime member. I'm also a Spotify subscriber. When I heard reports that Amazon was planning to add a music streaming service to Prime, I was hopeful that I'd be able to cancel my Spotify subscription.

But after using Amazon's service, I won't be cancelling Spotify anytime soon.

Amazon's Prime Music is an interesting new perk, but it doesn't compare to other streaming music services. Although it gives Amazon Prime another selling point, I doubt it will have a meaningful effect on the music space, at least in its current form. Apple (NASDAQ:AAPL) and Pandora (NYSE:P) have little to be concerned with.

Prime Music's numerous flaws
With just over 1 million songs, Amazon Prime Music is severely lacking when it comes to catalog depth. Most of the other premium streaming music services, including Apple's Beats Music and Spotify, offer around 20 times as much music.

There's a good chance that Amazon Prime Music doesn't offer most listeners' favorite musicians. My taste in music is far from obscure, but many of my favorite bands (Arcade Fire) are not included, or if they are included, Amazon Prime offers only an album or two (Nine Inch Nails, Korn).

Amazon's service is also lacking in terms of music quality. The highest quality songs Prime Music streams are 256kbps; that may be good enough for many, but Apple's Beats Music and most of the other services are better, streaming at 320kbps.

Then there's the user interface. Whereas a service like Beats Music or Spotify offers a sort of platform for easily browsing and playing songs, Amazon Prime Music doesn't differ noticeably from its standard MP3 store. Instead of clicking on and instantly playing songs, users are required to browse through Amazon's offerings and add them to their library, just as they would if they were purchasing MP3s from Amazon. The only difference is that the songs covered by Prime Music are free.

It's easy to see why Amazon chose this path -- the company is, after all, primarily a retailer, and still intends to sell music. But in terms of presentation and functionality, Prime Music is not truly a streaming service competitor.

Discovery is limited and there's nothing free here
When it comes to new music discovery, a feature central to Pandora and Apple's Beats Music, Amazon Prime is severely lacking. Within the mobile app, there's a recommendation tab, but Amazon's suggestions include many songs that must be purchased.

Things like custom radio stations and artist recommendations are nowhere to be found. Apple's Jimmy Iovine has characterized Beats Music as helping to find "what song comes next." When a subscriber first signs up for Beats, they're prompted with a series of options designed to gauge musical tastes. Beats allows streaming music on demand, but goes out of its way to recommend songs.

Pandora, of course, is entirely based around music discovery -- its Music Genome Project is perhaps its most crucial advantage. Listeners may use Pandora partially because it's free, but also because its music algorithms allow it to deliver a steady stream of similar songs in a custom radio station format.

Amazon needs to make some serious improvements
Amazon Prime Music needs a lot of work. As it stands, I can't imagine it siphoning off subscribers from other streaming music services, or noticeably impacting the listening metrics of Pandora.

It's possible that iPhone owners who are also Amazon Prime subscribers could be tempted to shift their MP3 purchases from Apple's iTunes to Amazon's MP3 store -- some of the songs they otherwise might have planned to buy would be free for them. But that business as a whole is in decline, and may have been the primary reason why Apple purchased Beats.

Until Amazon offers more music, this is one perk I don't think many Prime users will be relying on.

Leaked: Apple's next smart device (warning, it may shock you)
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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends, Apple, and Pandora Media. The Motley Fool owns shares of, Apple, and Pandora Media. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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