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A Market Analysis for
Amazon Music
Sarah Weathers
Full Sail University
Project & Portfolio II: Business and Marketing
November 18, 2022
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EXECUTIVE SUMMARY
This report reviews the current market, services, threats, and opportunities facing
Amazon Music. It looks at the tactics of new partnerships used by competitors and how it is
impacting Amazon Prime and Amazon Music. This report includes an overview of the company
and some information on the parent company, Amazon Music. The report includes
recommendations on how Amazon Music can increase and keep subscribers through specific
partnerships, and upgraded content, and recommends analysis reporting that could help Amazon
Music continue its growth.
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OBJECTIVE
This report was created to convince managers and key stakeholders of Amazon Prime
that opportunities exist to establish external partnerships and promotions to separate and elevate
its brand service, Amazon Music, from other competitors. Servicing a highly competitive and
creative market creates opportunities to target new and current users through the promotion of
original and exclusive content utilizing trending social media apps and partnerships with artist
labels.
RESEARCH METHODOLOGY
The information in this report uses internal and secondary research from the internet and
online databases. This research was collected during the month of November 2022, with
evidence as current as 2022. As it is released under the umbrella of Amazon's Prime Services,
specific information regarding revenue, profits, and market demographics for Amazon Music
could not be found. All information below regarding revenue, profits, and market for Amazon
comes from the combination of all Prime Services.
RESEARCH AND KEY FINDINGS
Streaming services and apps provide music listeners of today's day and age options due to
a highly competitive market. With new music and podcasts being promoted daily by record
labels and management, direct artist promotion, and other social media apps, finding a streaming
service that meets the consumer's needs can become a challenge with many options available.
Amazon Music is a brand service of Amazon.com, Inc. that provides users with an inclusive
music and podcast streaming platform featuring over 90 million songs available in various
subscription levels.
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Amazon.com, Inc. began in 1994 as an online bookstore founded by Jeff Bezos (Amazon
Statistics, 2022). Amazon has established itself beginning as an industry giant in the world of
products and services sales. Through their
various websites, they have become one of
the world’s largest online retailers, providing services throughout the North American region,
international regions, and online using Amazon Web Services (AWS) (NexisUni, 2022). In
addition to being an online sales hub for retailers around the world, Amazon also manufactures
and sells branded electronic devices that partner with its Prime services (NexisUni, 2022).
Amazon has positioned itself as a top industry leader by adhering to these four principles:
“Customer obsession rather than competitor focus, passion for invention, commitment to
operational excellence, and long-term thinking” (US About Amazon, 2020). Over the years,
Amazon has rolled out several subscription services, including Amazon Music, Prime Video,
Kindle Unlimited, Audible, Twitch, Prime Gaming, and other Subscribe & Save options.
Launched in 2007 by Amazon.com, Inc, Amazon Music became a brand service of the
parent company. Under the management of the company’s president, Andrew R. Jassy, Amazon
Music reached 68 million subscribers in 2021 (Amazon Music, 2021). The number of
subscribers has increased its competitive edge against streaming services like Apple Music,
Spotify, and Deezer (Amazon Music, 2021). A combination of Amazon’s other prime services,
Amazon Music provided $31.7 billion to Amazon’s total revenue in 2021 (Amazon Statistics,
2022). Offering a service that connects to their original Amazon Alexa and Echo products,
Amazon’s varying levels of subscriptions offer opportunities to gain new subscribers simply
because of convenience. In 2022, Amazon Music upgraded all Prime Subscribers to give full
access to their music and podcast collection, regardless of an additional subscription fee.
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Amazon.com, Inc., the parent company of Amazon Prime’s services, is financially stable,
experiencing a 7.77% increase over 52 weeks between 2020 and 2021 (Yahoo!, 2022). The
market index shifted 69.54% between the same time, with more than 17 billion shares sold in
2021, creating a net profit margin of 7% (Yahoo!, 2022).
Amazon’s Prime Services make up the fourth highest revenue for Amazon. These
subscription-based services provided $31.7 billion to Amazon’s total revenue in 2021 (Amazon
Statistics, 2022). The geographic makeup of Prime Subscribers includes the United States,
Europe, South America, Asia, Africa, and Australia, with the United States making up 60% and
the global market at 40% (Amazon Target Market 2022, 2022). Amazon reaches users ages 14
and older, with a 50% split of males and females (Amazon Target Market 2022, 2022). Roughly
82% of Prime users are aged 20-29 (Radic, D., 2022). Lower class, working class, middle class,
upper class, and those with a reformer lifestyle create the psychographic market of subscribers,
and includes those at a bachelor stage (young, single, and not living at home), newly married
couples, full nest I – III, and solitary survivors in the labor force and retired (Amazon
Segmentation, Targeting, and Position, 2022).
Consumers of Prime’s services seek out a wide range of products, the convenience of
online purchasing, competitive prices, and services provided and included in the general
membership (Amazon Segmentation, Targeting, and Position, 2022). As of 2021, Amazon Music
makes up 13.75% of the global streaming market share of subscribers, creating an opportunity
for significant growth and connection with new and current subscribers (Music streaming app
revenue and usage statistics, 2022).
Servicing a market as wide and varied as Amazon’s comes with many challenges,
opportunities, threats, and weaknesses to be aware of. Amazon has successfully launched several
initiatives to create space to “welcome the best and brightest talent from around the world” (US
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About Amazon, 2022). Amazon’s The Climate Pledge, Welcome Door programs, Housing
Equity Funds, and other initiatives and programs offer consumers, employees, and subscribers
further reasons to support the work and services of Amazon.com, Inc. To these same successes,
Amazon faces weaknesses and threats regarding service competitors, a limited global presence,
and rumors of a pending recession. Combatting the strengths, weaknesses, opportunities, and
threats will require Amazon Prime services to continue evaluating the services and benefits they
offer to their subscribers.
Amazon Music offers subscriptions in 3 levels, including free, unlimited, and family
plans. All subscription levels provide users access to over 2 million songs, top playlists, user-
curated playlists, thousands of Stations, Amazon’s podcast library, and playback on Echo and
Alexa-enabled devices (Goettsche Partners, 2011). In addition to the extensive content
collection, Amazon Music also offers streaming in Standard Definition (SD), High Definition
(HD), Ultra High Definition (Ultra HD), and Spatial Audio, depending on the devices and
speakers used, with Unlimited Subscribers being guaranteed the highest quality playback across
all devices (Goettsche Partners, 2011).
Amazon Music’s direct competitors, Spotify, Apple Music, and Deezer offer similar
subscription levels, at varying prices and features, including Student levels. Spotify is the most
popular streaming platform in the world with over 350 million users and 150 million subscribers
(Music streaming app revenue and
usage statistics, 2022). Apple Music
features 88 million subscribers as of
June 2021, with more subscribers
than Spotify in the United States
(Apple Music Revenue and Usage
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Statistics, 2022). A relatively new service, Deezer, makes up 1.42% of the global streaming
market share by subscribers as of 2021 (Music streaming app revenue and usage statistics, 2022),
with only 9.4 million subscribers as of September 2022 (Wendel, J., 2022). The royalty rate (per
stream) offered by Amazon Music is $0.00402, requiring 249 streams to make $1.00, compared
to Apple Music’s average Royalty Rate of $0.008 per stream, Spotify’s $0.00318 per stream, and
Deezer’s $0.0011 per stream (Fitzjohn, S., & Tips, M. M., 2022).
Another competitor not typically considered is the world-renowned social media app,
TikTok. In late 2022, TikTok parent, ByteDance, has released news of its partnership with
Spotify with “Music-Streaming Expansion”
(Toonkel, J., Steele, A., & Rodriguez, S.,
2022). According to TikTok’s 2021 Music
Report, over 175 songs that trended on the
app were on the chart for the Billboard Hot
100, making them the number 1 stream
driver (TikTok, 2021). Songs trending on the app drive trending songs on Spotify, even for
unsigned artists (TikTok, 2021). TikTok has revealed that 75% of its US users discover new
artists when using the app, and over 63% of all users state they have heard new music via the
platform (Stassen, M., 2021). A report from MCR Data states that 67% of TikTok users say they
are more likely to seek out a song heard on TikTok on their subscribed music streaming platform
(Strassen, M., 2021).
CONCLUSIONS
Amazon.com, Inc is holding the market well in their overall services and against the
competition, even though their business plans and tactics are easily recreated for competitors.
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Amazon’s Prime Services is successful, due in part to its partnerships established and the
features included for all subscribers. Amazon Music has experienced growth in subscribers and
will likely continue to see this continue with the recent change in upgrading all prime subscribers
to the full music and podcast library without an additional subscription. Pending partnerships
between Spotify and TikTok, and any others that may form, create a new dynamic for Amazon
Music to compete with to remain successful in this market.
RECOMMENDATIONS
Based on the research and conclusions, Amazon Music needs to find new ways to reach
new subscribers and keep current users to stand out and remain competitive in this market.
Amazon should begin creating and updating “Trending on TikTok” playlists, featuring songs
subscribers are already researching, by February 2023. These songs should also be added to the
user’s curated “Top Songs”, “Songs You May Like”, and “This Year’s Top Songs” playlists
throughout the year.
Opportunity for continued and expanded partnerships for exclusive and original content exists to
draw new subscribers and current subscribers. Amazon should look at developing half-year or
full-year contracts with Sony Music Entertainment and Universal Music Group to exclusively
promote artist’s original releases, exclusive interviews, music videos, and docu-series for
recently signed artists from TikTok to draw in users looking for new artists and new music. If
executed within the next year, TikTok’s partnerships with Spotify will still drive users and
subscribers to Amazon Music to find this content.
Another area to be considered is adjusting and offering premium royalty rates to all artists,
including independent artists. Extending royalties to independent artists gives space to release
exclusive and original content within Amazon’s music streaming app. Artists will have reason to
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partner with Amazon Music and any label partnerships that exist to share their music and will
draw new users to become subscribers. Offering higher royalty rates per stream provides the
opportunity for more exclusive and original content to be promoted and provided by artists,
creating higher revenue and subscribers for Amazon Music.
Continued evaluation of Amazon Music and its competitors should be conducted
consistently throughout the year to provide insight into new trends and opportunities within the
market. An official analysis and report should be completed yearly to track progress and evaluate
new strengths, weaknesses, opportunities, and threats. These reports and evaluations could create
updated recommendations and tactics to support Amazon Music.
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