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Music Streaming Competition Intensifies With Revamped Offerings From Amazon, Pandora

Music Streaming Battle Cranked Up To 11|Pandora|Amazon

The New York Times reported over the weekend that Pandora Media Inc P 5.14% will introduce a new streaming music service that will cost just $5 per month. However, its competitive pricing point in a landscape full of $10 a month services will be short lived, as Amazon.com, Inc. AMZN 0.37% will officially enter the streaming music space with a similar $5 a month offering.

The New York Times, citing "multiple people with direct knowledge of the plan," noted that Pandora's $5 a month subscription platform could be announced this week. Subscribers would have the ability to skip more unwanted songs as well as download several hours' worth of music that can be played back offline.

The report added that Pandora hopes to become a "fully developed competitor" to Spotify and other peers before Christmas. Specifically, Pandora hopes to be able to offer its subscribers a catalog of tens of millions of songs that can be accessed on demand. The price for this service will be $10.

Amazon's New Service

Amazon is likely to introduce a full music service of its own, which may replace its limited catalog of on-demand music available to Prime members.

However, the $5 price point may only be available to customers who own an Echo device — Amazon's voice-activated speaker system.

$5 A Month In A $10 World

Pandora and Amazon's $5 a month service could prove to be a game changer in the streaming music video where the norm is $10 a month.

The New York Times noted that $10 a month may be a high price for casual listeners despite the appeal of "all you can listen" for a fixed monthly cost. In fact, Russ Crupnick, managing partner of the market research firm MusicWatch, noted that less engaged consumers may be better off saving the $10 a month and streaming music for free on YouTube or accessing a free radio service.

He also added that a 50 percent price drop over the industry standard $10 a month may not be enough to entice many occasional music listeners.

"I don't know that you get the casual listener to automatically be a superfan just by lowering the price," Crupnick told The New York Times.

In the meantime, the competitive landscape of the industry is set to change but it remains to be seen if the change will benefit Pandora whose stock has lost more than 25 percent over the past year.

Competitive Landscape

Most streaming music platforms offer a free version for consumers that come with limited use and ads. Here is a summary of some of the notable platforms that offer a paid service:

  • Spotify Premium: $9.99.
  • Spotify Premium For Family: $14.99 for up to six accounts.
  • Pandora: $9.99.
  • Apple Music: $9.99.
  • Rhapsody: $9.99.
  • Tidal: $9.99.
  • Tidal HiFi: $19.99
  • Google Play Music: $9.99.

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