Amazon’s free Alexa supported Music Service

Reports that Amazon is planning on launching a free ad-supported music service caused Spotify’s (the Swedish audio streaming platform) shares to fall 4% on Monday, April 15th. And, on April 18th, Amazon published a blog post where it announced that launch of Amazon’s free music-streaming service in the US. The ad-supported free service became available exclusively through Alexa, Amazon’s voice assistant programmed into Echo devices. It has been reported thatthe Alexa only launch of the service, which even lacks a branded name of its own, positions itself as a driver of Echo sales and advertising income rather than as a competitor for streaming services like Spotify. 

MarketWatch analyst Russ Crupnick told Variety that he doesn’t see Amazon’s new free tier “changing anything major” in the music ecosystem. “It will probably have little impact on the established players – Spotify has incredible loyalty with its listeners and I don’t see people marching off to Amazon because it’s going to have a free tier,” Crupnick said. “Amazon has a much more casual audience – it’s large, but they spend much fewer hours [on the platform] and are generally less engaged with music.”

In the US, American courts interpret the law according to a standard by which the goal of antitrust is to promote consumer welfare. In contrast, in the EU, being unfair to competing companies can violate antitrust law. The line between beating rival firms with savvy competition (good) and beating rival firms by abusing market power (bad) becomes very important to draw.  Only time will tell whether the service evolves into something more and ends up being a competitor for Spotify.

Sources: https://www.competitionpolicyinternational.com/us-spotify-shares-sink-on-amazon-music-news/?utm_source=CPI+Subscribers&utm_campaign=1df274f85e-EMAIL_CAMPAIGN_2019_04_16_10_13&utm_medium=email&utm_term=0_0ea61134a5-1df274f85e-236855437 and

https://www.rollingstone.com/music/music-news/amazon-music-free-now-824734/ and

https://www.vox.com/policy-and-politics/2018/9/21/17887008/amazon-europe-antitrust-laws

Author: CPI, Amy X. Wang, and Matthew Yglesias respectively for the 3 sources.

Publication: Competition Policy International, Rolling Stone, and Vox respectively for the 3 sources. 

Publication Date: April 16, 2019, April 19, 2019, and September 21, 2018 respectively for the 3 sources.