Spotify and Apple Music better be ready... because Amazon's music-streaming app will be playing 100 million songs and ad-free podcasts.
👉 Background: It’s fair to say that Amazon has its fingers in a fair few pies. It's got its e-commerce marketplace, warehouses that fulfil orders, Amazon Web Services (AWS) and of course, it’s Amazon Prime subscription.
👉 What happened: But now, Amazon is going one-better. It’s music-streaming service Amazon Music will now be bundled into its existing Prime subscription. We’re talking 100 million songs and ad-free podcasts - this will challenge Spotify and Apple Music directly.
👉 What else: But hold your horses because the regulators seem to be a little concerned about how this cross-subsidy would impact its rivals.
💡Cross-subsidisation is the strategy of making a loss on a specific product but recouping the loss through the profitable sale of other products/services.
💡For some retailers, the goal might be selling a product cheap to get foot-traffic in the store and then upselling other, more profitable products. In the case of Amazon, it’s more about subsidising their features to gain market dominance.
💡The average Amazon Prime member is reported to spend around $1,400 per year, while non-member customers spend $600. So not only is this cross-subsidy a pretty effective way of hurting competition, but it also drives more sales for the Zon.
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