Amazon and YouTube each just launched free music streaming services. Like Spotify's free tier, both offer no-cost ad-supported access to music. But despite the media hype, their ability and even desire to compete with Spotify is limited.
Spotify's free tier offers on demand access to 40 million tracks across almost every platform imaginable. Whereas YouTube and Amazon offer free access to aritst radio stations and playlist that are much more like Pandora's free tier.
Then there's the company's themselves, their goals and how user perceive them.
“I don’t see this changing anything major in the music ecosystem,” analyst Russ Crupnick of MusicWatch tells Variety. “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."
“However,” Crupnick adds, “it may bite into Spotify’s advertising, if not its audience. This clearly fits in with Amazon’s larger advertising plan: It’s not hard to imagine, after a consumer asks Alexa to play a song, the voice then saying, ‘After you’re done listening to the song, check out this product, available now on Amazon…’.”
MIDiA analyst Mark Mulligan agrees: “Amazon is in the process of building new, large-scale digital properties as a platform for its advertising business, which is growing faster than any of the other tech majors’ and is already a fifth of the size of Facebook’s entire ad business."
“Spotify should be worried," Mulliagn adds, "not just because Amazon has already proven itself a more-than-able competitor in subscriptions but also because it has the ad sales infrastructure that Spotify does not. A free music audience without effective ad sales is just a cost to the business; a free music audience with a well-oiled ad sales machine on top of it is a cash cow.”
Much the same could also be said about YouTube's new free music service. Google's ad structure is massive and YouTube just added a new way to deliver ads that also expands it's paid subscription funnel.