Anytime Amazon.com (NASDAQ:AMZN) makes a change to its Prime membership service it draws attention.
The biggest change -- raising the price from $79 to $99 a year -- sparked fears that people would abandon the service. That did not happen and the online retailer continues to add members (though exactly how many it does not release).
Prime, which now includes a streaming video and a music service along with the original offer of free two-day shipping on millions items, remains integral to the company because members spend more than non-members.
That makes any change to the deal a bit of a risk for the company. Still, a number of tweaks to the service have been rolled out that may impact whether new customers sign on and existing ones renew.
What did Amazon do?
First, the online retailer cut the number of adults living in the same household who can share Prime shipping benefits. Previously Amazon had allowed sharing with up to four additional family members (who reside under the same roof) and now it only allows sharing with a single person by the main account holder, GeekWire reported.
Prime Video and other non-shipping services can be shared with up to four children (who would not have their own accounts) as well.
But, where Amazon taketh away the company also giveth. It told the online tech news site that it's now allowing members to do additional things including sharing Kindle book purchases with a spouse. A spokesman gave GeekWire the following statement.
"We are excited to allow Prime members to share more benefits within their household. This was always our intention, and the new Amazon Households Program allows a family unlimited access to Prime Instant Video so they can share access to videos included with Prime," the spokeswoman said. "It also allows households to create a shared library of ebooks, audiobooks, apps and games across all of Amazon devices and media apps, in addition to sharing shipping benefits and more."
It's hard to know if Prime users will see these changes as a positive or a negative, but they should help Amazon cut down on one person subscribing then sharing his or her benefits improperly. This move looks like a benefit has been taken away but in most cases the people using it were likely cheating the system.
Why does Prime matter?
Recent research from Consumer Intelligence Research Partners estimated that as of the end of March 2015, 42% of Amazon customers were Prime members, which translates to about 41 million Prime members. Those members, CIRP reported, spend "on average about $1,100 per year, compared to about $700 per year for non-members."
More Prime members means more revenue for the company, which is why it needs to be incredibly careful when making any changes to the program that might be perceived as negative.
Will these moves hurt?
Amazon has been treading very lightly here. These moves were not announced with a big press conference and your average married couple with a kid or a few kids will actually come out with enhanced value for their yearly $99 subscription.
The people who will lose out on this deal are mostly the ones who were working the system. That could be a vocal constituency but it's likely not a large one.
Making these moves allows the company to keep a tight rein on shipping costs related to Prime while being generous with the benefits, which have little added cost to the company when used more. It's a smart play that should keep most subscribers happy, paying, and shopping.
Daniel Kline has no position in any stocks mentioned. He is a Prime member who has always just ordered for his spouse and did not realize he could share the benefits with her. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. 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.