Amazon is reportedly in discussions with major music labels to launch its own streaming service, in a move that could have serious repercussions for music startups. According to Re/code, the subscription service would be bundled with Amazon Prime, the $79-a-year program that offers free two-day delivery and streaming videos.
Many in the music industry have predicted this move for awhile, but that doesn't make it any less shocking. With so many entrants in the music streaming space, it's hard to imagine how Amazon would stand out. Apple launched iTunes Radio last year, and outside of Beats Music, the curation-focused startup helmed by Jimmy Iovine, Trent Reznor, and Dr. Dre, and Shazam, which has designs on taking over the world, few have proved to be viable businesses yet.
Amazon has significant reach, however, with more than 20 million Prime members worldwide, so rolling out a new service could make things even tougher on startups in the space. And Amazon has demonstrated how effective throwing in an extra freebie can be by offering streaming video as part of Amazon Prime. Who's to say free music wouldn't sweeten the deal?
Amazon also has the right talent to pull off the move. As Re/code points out, in October 2012 the company hired Michael Paull, a former Sony music executive, to lead its digital music operations. And around the same time, Drew Denbo, who previously handled business development for Rhapsody and MOG, two other streaming services, joined Amazon. Adam Parness, a licensing exec for Rhapsody, joined the company last year.