Amazon Stock: Why Prime Music Makes So Much Sense

Giving Prime members even more reason to visit is key to the Amazon stock story.

Jun 17, 2014 at 7:34PM

Will Prime Music be a catalyst for Amazon stock? Credits:, YouTube.'s (NASDAQ:AMZN) Prime Music isn't better than any of the services it purports to compete with. Heck, you could even argue it's much worse than what Spotify, Beats Music, and Pandora (NYSE:P) offer. Even so, I expect Prime Music to be a catalyst for Amazon stock because it gives the e-tailer's most valuable members yet another reason to hang around the store.

Why "good enough" is so great
First, let's address why Amazon built such a weak alternative. The short answer is because it could. Even a simple, ad-free service such as Prime Music serves as a reminder that Spotify and Pandora insist on filling your ears with pitches you'd rather mute.

Money is also a factor. Amazon would have to invest millions (or perhaps tens of millions) to compete with the catalogs available at Spotify and Beats Music. There's also quality to consider. Upgrading Prime Music to stream at the audiophile-preferred rate of 320 kbps would consume resources that might otherwise go to service-profitable Amazon Web Services clients.

Every incremental service increases the odds of a transaction
The goal here isn't to build the best product or even disrupt the industry. Amazon merely wants to grow its base of Prime members because they shop more. But don't take my word for it. Here's Amazon Vice President of Digital Music Steve Boom, in an interview with VentureBeat late last week:

The goal we have when adding new services to Prime [membership] comes down to two things. We want existing Prime members to have deeper and longer relationships with Amazon. But we also try to look at services that have universal appeal and are used frequently if not daily. And music is an obvious service that fits into that description.

Just as Apple (NASDAQ:AAPL) is buying Beats Electronics to help sell the iPhone, Amazon is offering Prime Music to help sell everything else in its store to its most qualified customers. So don't think of Prime Music as a Spotify killer. Nor is it a threat to Pandora or Beats. Amazon isn't after audiophiles, but rather everyday, casual listeners. Millions of us who haven't yet signed up for Prime but who would do so given the right incentive. Prime Music just made their decision easier, and Amazon stock owners should see the benefits.

Leaked: The secret Apple project that explains Amazon's strategy
It's no accident that Amazon is making Prime services as accessible as possible. Smart devices are driving traffic like never before, which is why Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But now that the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool

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.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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