Amazon to Introduce TV and Music Goodies to Appease Prime Members

Amazon

Source: http://www.flickr.com/photos/acetonic/

Amazon (NASDAQ:AMZN) is reportedly getting close to releasing its own TV set-top box, which will likely contain apps for Netflix (NASDAQ:NFLX) and Hulu and could even be used to stream music once Amazon firms up plans to create a service to compete with Spotify and Pandora (NYSE:P).

Gigaom reports, citing anonymous sources, that Amazon is releasing a set-top box that will compete with Roku and Apple’s (NASDAQ:AAPL) Apple TV “any day now.” Those sources confirmed that both Netflix and Hulu Plus will be included on the device, which will run on an altered version of Google’s (NASDAQ:GOOG) Android operating system. Amazon is apparently choosing to include Netflix and Hulu even though it runs its own competing video streaming service for Prime members.

A new report from the Wall Street Journal adds to previous rumors that Amazon is planning to make a music streaming service for Prime members as well. Sources familiar with the project who spoke to the Journal said the company could make the service so listeners can only listen to a portion of a given song or album in order to encourage them to download the songs from Amazon’s MP3 store. In that way, the service would be similar to Apple’s iTunes Radio, which also features prominent “buy” buttons so that a listener can purchase a track they might like via iTunes.

The average length of time that Amazon would allow a user could listen to a song is unknown, although it’s hard to see the draw to such a service when Spotify and others let you listen to the full song for free. Amazon would do better to allow listeners to listen to the whole song — perhaps adding advertisements if need be to pay off the record companies — while still encouraging users to buy the songs.

The Wall Street Journal’s sources said Amazon is currently in negotiations with the biggest record companies on the price for the rights to their music. Amazon would like to pay the companies a fixed fee rather than paying them based on the number of times users listen to a song as other streaming services like Pandora do. The record companies are expressing reluctance to add their newest releases to such a service.

The music streaming service would be an extra reward to give Prime customers as Amazon plans to hike the yearly fee that the company’s most loyal customers and biggest spenders pay in order to receive free two-day shipping and access to Prime Instant Video. CFO Tom Szkutak said during the company’s latest earning call that Amazon is planning to increase Prime’s yearly fee between $20 and $40 from the current $79.

“Even as fuel and transportation costs have increased, the $79 price has remained the same. We know the customers love Prime as the usage of the shipping benefit has increased dramatically since launch. On a per customer basis, Prime members are ordering more items across more categories with free two-day shipping than ever before,” Szkutak said. “With the increased cost of fuel, transportation, as well as the increased usage among Prime members, we’re considering increasing the price of Prime between $20 to $40 in the U.S.”

Amazon is hoping that the extra goodies like the set-top box and the music streaming service will be enough to get Prime members to stick with the service despite a major price increase.

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