AMAZON ECHOES
IN MUSIC CITY
When Amazon got into the subscription streaming business in October, it had a built-in advantage: a large and loyal customer base that had been purchasing music on the e–commerce site for two decades. Essentially, they had the heart of mainstream America in their back pocket—including underserved country fans who were slow to stream their music.
In 2017, streaming has represented 38% of country-music consumption (up from 24% in 2016) about 15% lower than overall streaming.
Amazon’s share of country streams is twice the industry average. In a typical week, half of its top streaming songs and albums are country. This gives them, as Warner Music Nashville topper John Esposito points out, “the biggest reach in the digital space” for the demo.
“Historically, the industry has taken a ‘one-size-fits-all’ approach to music streaming, which is not the best way to bring new listeners or new service providers into music streaming, explains Steve Boom, VP of Amazon Music. “We’ve been at our most successful where we’ve worked closely with the industry to offer new services and new models that expand the overall music streaming industry.”
Amazon's Steve Boom and Kelly Rich, UMG Nashville prez Cindy Mabe, Warner Music Nashville boss John Esposito
“Amazon’s base is wider than most streaming accounts and they appeal to families just as country music does,” notes UMG Nashville President Cindy Mabe. “The voice-activated Echo has really changed the ease of entry with our fan base. Additionally, Amazon is the place that so many of our customers already shop, they already trust them. And with only a voice-activated barrier to entry, Amazon is speaking directly to our consumer and teaching them the value and ease of streaming. No other account has targeted the country audience the same way, because we are not primarily composed of millennials.”
“Amazon is speaking directly to our consumer and teaching them the value and ease of streaming.”– UMG Nashville President Cindy Mabe
“Our advantage is that we already have one of the largest customer bases in the world, and a core demographic that is in line with the country demographic—they are loyal and have a high discretionary income,” says Kelly Rich, Amazon’s Senior Label Relations Manager, Nashville. “Amazon is giving country music a level playing field with other genres and it’s resonating with our customers.”
“What is great about Amazon is that is the only partner that has physical goods, digital downloads and a streaming service,” emphasizes Ken Robold, EVP/COO, Sony Music Nashville. “This makes them very appealing from a label perspective.”
The pre-existing retail platforms set the stage well. “Country music listeners have always felt at home in Amazon Music, even before we launched streaming,” says Boom. “Since launching streaming, we have invested heavily in country music programming and also marketing to those fans.”
“The Amazon consumer seems to be a perfect fit with the country music consumer,” Esposito adds, “and music being such a large part of Amazon's ecosystem gives them direct access to our consumer. They are able to listen to country music passively—streaming the hits—or actively, by artist and by creating their own playlists.”
Amazon recently struck a deal with Garth Brooks to sponsor his current tour and exclusively stream his previously unavailable catalog. “Getting the Garth deal done was a huge boost,” Robold says, “both for the service and genre.”
The affiliation, Boom adds, made a lot of sense to both sides. “Garth Brooks is the top-selling solo artist in U.S. history, and was looking for a real partnership when making his music available for streaming for the first time,” he explains. “Given Amazon’s big base of country music fans, as well as our strong physical music business, we felt like it was the perfect match and Garth has been an amazing partner.”
Brooks himself seems happy with the results thus far. "As cool as Amazon is, it's the people who you get to work with there that make it an absolute blast," he says.
Steve Boom at SXSW with Garth Brooks (photo credit: Katrina Barber) →
Manager Marion Kraft (Miranda Lambert, Ashley Monroe) says the Amazon folks “have come to town and are accessible and open to ideas and discussions on what our artists need to connect with their fan base."
"Amazon has the ability to customize their marketing because of the data that they have access to," Kraft continues. "The Middle America consumer may be late to the game, but with Amazon’s massive retail capability and access to built-in customers that are already using the service, then add in some simple ‘tutorial marketing’ about streaming, they may be able to capture the hearts and wallets of the country consumer after all.”
Although all the major streamers have, um, boots on the ground in Nashville, it’s Amazon’s success with country that’s prompted labels to react.
“It has altered our strategy in several ways, especially in how we introduce our artists into the marketplace as well as how we market our artists within each of the services,” says Robold. “One encouraging element has been the willingness of the partners to spend consumer dollars of their own on select releases if there is a compelling enough plan that will benefit both sides.”
With a retail policy of deep discounting, Amazon applied the same strategy to streaming via its Amazon Music Unlimited on-demand service. (Its initial streaming service, Prime Music, debuted in 2014; it’s included with Prime membership, which also includes free shipping, video and more). With Amazon Music Unlimited, Amazon Prime members could get “tens of millions” of songs for $7.99 per month or $79 per year, less than a Spotify or Apple subscription. Non-Prime members pay $9.99 per month, comparable to other streaming services.
“Success at this stage is continually innovating to ensure Amazon Music is a destination that our customers love to use because it’s easy to find, discover and listen to the songs and artists they enjoy. We are very bullish about the long-term future of the music industry.” – Steve Boom, Amazon
“Our strategy has always been to expand premium music streaming to more customers, or those who are late to adopt streaming, through innovative products like Prime Music and Amazon Music Unlimited,” says Boom. “Prime Music caters to the mainstream listener, offering more than 2 million songs plus thousands of playlists and stations for ad-free listening as part of your Prime membership. With Amazon Music Unlimited, we’re offering a full catalog music service that’s easier to use than anything else in the marketplace, thanks to Alexa. And we’re offering unique models, such as our $3.99/month Echo Plan, that are expanding the premium streaming segment.”
About 78% of Amazon Prime members already listen to Amazon Music, according to Cowen analyst John Blackledge, who estimates there are 49m Amazon Prime members.
As streaming numbers grow, Amazon continues to upgrade its proprietary gear: They just released the Echo Show ($230), with a touch screen. It can be redundant with other tablet and smartphone devices, but should provide an interesting test to see whether consumers’ loyalty to Alexa and Amazon can parallel the love affair consumers have long had with Apple.
With Echo, Amazon is carving its own path in the streaming economy: By moving streaming from the smartphone to the home, it hopes to restore communal experience to music listening. Amazon estimates it will sell 10 million Echos in 2017. By 2020, that figure could increase to 40 million.
“They may be able to capture the hearts and wallets of the country consumer after all.”—manager Marion Kraft (seen here with Sony Music Nashville chief Randy Goodman and superstar Miranda Lambert)
“Because of the Echo and Dot, music is now more important to Amazon than ever,” notes Cindy Mabe. “That has resulted in Amazon being one of the most aggressive accounts coming up with promotional opportunities with our artists.”
“The first phase of streaming was all about the smartphone, including for Amazon,” says Boom. “But we’re entering a new phase where growth will also be driven by other devices which are used in different places. Listening to music on Echo has really captured people’s imaginations. Whenever we see someone talk to Alexa for the first time to ask for their favorite song, their eyes light up when that song starts playing. Powerful, but simple.”
The company uses Prime and Alexa to funnel users to a subscription option and a free Echo trial. Amazon says the conversion rate is high (though we don’t know the numbers). Alexa upsells Prime customers, and because Amazon customers’ credit info is already on hand, all it takes is a click to upgrade.
Like Apple, Amazon has such a diversified and cash-intensive business that it’s able to grow its streaming biz without stressing about an immediate return–though judging by its quick growth in streaming marketshare, that return is already materializing.
“At Amazon, we’re always thinking about the long-term view because we’re so focused on building the best possible experiences for our customers,” Boom says. “Success at this stage is continually innovating to ensure Amazon Music is a destination that our customers love to use because it’s easy to find, discover and listen to the songs and artists they enjoy. We are very bullish about the long-term future of the music industry.”
