Amazon, Pandora set to carpetbomb iTunes
The two giants of online media, Amazon and Pandora Media, are set to introduce new versions of their music streaming services in coming weeks, charging $5 a month, according to multiple people with direct knowledge of the plans.
The plans will put pressure on incumbent players like Spotify and Apple Music and offer the music industry a major test regarding the value of streaming music.
The pricing model of $10 a month, the standard rate charged by most on-demand streaming services, has been compared to the 99 cents that Apple charged for song downloads when it opened the iTunes music store in 2003 — a simple and comprehensible amount that established in consumers’ minds the value of music in the internet age.
“Even with the presence of free, you can still get tens of millions to pay for streaming services — and possibly much more — in the event that you get the price much lower,” said David Pakman, a former digital music executive.
Pandora is expected to unveil, perhaps as early as this week, an expanded version of its $5 subscription platform. That service will store several hours’ worth of playlists online, according to sources. By Christmas Pandora wants to introduce a fully developed competitor to Spo- tify and Apple Music, with a catalogue of tens of millions of songs. The version is expected to cost $10 a month.
Amazon’s ambitions may pose more of a challenge to the existing services. The company already offers a limited catalogue of on-demand music to members of its Prime program, which costs $99 a year for free shipping, streaming movies and other perks. But in coming weeks, Amazon is also expected to introduce a music service with a full catalog, charging $10 a month or about half that amount for customers who use the Echo, Amazon’s voice-activated speaker system, according to several people who have been briefed on the plans.
Pandora and Amazon are close to completing those deals, according to sources.
Both companies declined to comment.