Please ensure Javascript is enabled for purposes of website accessibility

Putting Amazon Music's 55 Million Customers Into Perspective

By Evan Niu, CFA - Jan 24, 2020 at 8:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

That includes users of all the tiers that Amazon offers.

For a company known for keeping key metrics close to the chest, (AMZN 3.66%) surprised investors this week by disclosing how many Amazon Music subscribers it has. The last vague disclosure was when the company said in 2018 that it had "tens of millions" of paid subscriptions. The company has now confirmed that it has over 55 million customers worldwide, Amazon's first official customer disclosure for its music streaming business.

Let's put that figure into perspective.

Amazon's Echo Studio on a cabinet.

The Amazon Echo Studio. Image source: Amazon.

Amazon has a music plan for everyone

Spotify (SPOT 4.00%) and Apple (AAPL 4.08%) are the two leaders in paid music streaming, with the Swedish company leading the way with 113 million premium subscribers as of the third quarter. Apple provides irregular disclosures, mostly when Apple Music hits a new milestone. Services chief Eddy Cue said last summer that Apple Music had reached 60 million subscribers.

"We're proud to reach this incredible milestone and are overwhelmed by our customers' response to Amazon Music," VP of Amazon Music Steve Boom said in a statement. "Our strategy is unique and, like everything we do at Amazon, starts with our customers."

However, there's a pretty important caveat: Amazon's metric includes all users of all tiers, not just paid subscribers. The tech giant offers more tiers of service than rivals, including an ad-supported version and a bare-bones service (2 million songs) that is included for free with Prime membership. Amazon introduced a high-fidelity Amazon Music HD service late last year, which leverages the high-end Echo Studio that delivers high-fidelity audio. Amazon even offers an affordable single device plan for just $4 per month, which can only be accessed on a single Fire TV or Echo device.

Only Amazon Music Unlimited is directly comparable to Apple Music or Spotify Premium, although Spotify also has a free tier. Amazon Music Unlimited is typically priced at the same $10 per month as similar services, but Prime members can get it for a discounted $8 per month. Amazon Music Unlimited subscriptions have jumped 50% over the past year, according to the company. Expectedly, it did not specify exactly how many of those subscriptions it now has.

Questions remain

In other words, Amazon Music's 55 million customers can most appropriately be compared to Spotify's monthly active users (MAUs), of which there are 248 million. Spotify has 141 million ad-supported MAUs using the free tier, which means there are about 6 million inactive premium subscribers. (Apple Music does not have a free, ad-supported tier.)

That's assuming that Amazon Music customers are listening on a monthly basis, and the company did not elaborate how it defines an Amazon Music customer. Investors can safely infer that Amazon isn't simply counting all Prime members as Music customers, since Amazon has over 100 million Prime members, so there must be some listening activity to qualify.

Amazon is clearly interested in growing its music streaming business (and advertising revenue). The company is undoubtedly making progress, but, as is often the case, Amazon's disclosure raises more questions than it answers.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned, Inc. Stock Quote, Inc.
$2,302.93 (3.66%) $81.38
Apple Inc. Stock Quote
Apple Inc.
$149.64 (4.08%) $5.86
Spotify Stock Quote
$112.97 (4.00%) $4.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.