Amazon.com (NASDAQ:AMZN) can't say it surprised its customers with an increase for its Amazon Prime loyalty membership plan. The leading online retailer is pushing its annual membership up by $20 to $99 a year, but it had suggested in its most recent quarterly earnings call that the price could have gone even higher.
It would have been better if Amazon had timed this uptick to coincide with the addition of new features. At least then, customers would have associated the increase with enhanced benefits. Still, this is the first increase to Amazon Prime since its inception nine years ago. Can customers really complain about a 25% uptick after nine years, compared with what inflation has done to their cable bills, transportation costs, or even movie outings?
Some folks will throw in the towel, of course. If Amazon's premium shopping platform had total pricing elasticity, it would have raised its prices years ago. However, Amazon clearly believes it can push through this rate increase, which will kick in later this month for new members and for when existing members hit their anniversary renewals. It will also be interesting to see whether those who stick around will find themselves spending even more to justify the steeper cover charge.
Briefly in the news
And now let's look at some of the other stories that shaped our week.
- Facebook (NASDAQ:FB) is finally getting ready to roll out its long-promised video ads. Facebook's Premium Video Ads won't be as annoying as initially feared. They won't automatically play with audio, as some had originally suggested, and the 15-second spots will also stop playing the moment someone scrolls past them. It's still a big gamble for Facebook, so Thursday's announcement that it was opening up the platform to select advertisers bears watching.
- It's not just faulty ignition switches that may cutting off power at General Motors (NYSE:GM). Federal prosecutors are investigating GM's recent recall that involves 1.6 million cars to determine how long the automaker knew about the problem before acting on the information.
- Tesla Motors (NASDAQ:TSLA) is running into some resistance in New Jersey as Gov. Chris Christie pushed through a regulatory change requiring all new cars to be sold through dealer franchises. The move effectively slams the brakes on Tesla's model, which sells directly to consumers. Expect both sides to keep firing away at one another in the coming weeks.
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