Continuing a flurry of new business initiatives, ranging from a standalone streaming video platform to private-labeled grocery items, Amazon made even more news last Thursday with the announcement of a stand-alone streaming music service, priced at $9.99 per month. The music nerds in our office took immediate notice, railing on Amazon’s currently limited music catalog – a shortcoming the Seattle behemoth is reportedly working to address.
Obviously, Amazon is setting sights on the likes of Spotify and Apple, while hoping the growing popularity of their Echo device will give Amazon fans a natural, end-to-end, in-home music solution. Will it work? The early numbers make it hard to tell.
Immediately following the first news, CivicScience deployed two questions to a representative sample of U.S. consumers aged 13 and older. The first simply aimed to identify music listeners who are most interested in the streaming service.
Starting with a sample of 2,053 respondents, we find that only 1% consider themselves “very likely” to subscribe to the service, with another 7% “somewhat likely.” At first glance, these don’t seem like huge numbers. But, consider that roughly 17% of consumers listen to any kind of paid streaming service today. A decent chunk of those people could be in play.
When we add the “very” and “somewhat” groups, we find a few insights into the potentially persuadable customers. Age is a big factor. As many as 14% of respondents aged 13 to 17 and 25 to 29 fall into our “likely” category. 10% of respondents aged 35 to 44 could subscribe. Our aggregate numbers are severely dragged down by older respondents, where only 1% indicated an interest in the service. Likely subscribers are also more likely to be female, Hispanic or Black, single, and living in major cities. Naturally, they are much more likely to already subscribe to another paid streaming service.
We decided to take the research a little further, trying to tease out whether Amazon is going to attract new streamers or just cannibalize the other services. Here was our second question:
Again, Amazon’s potential market looks fairly small. Of the consumers who say they plan to subscribe to the service, an equal 1/3rd indicate that they will be first-time streamers, 1/3rd will keep other paid subscriptions, and 1/3rd will unsubscribe from current services. In other words, Amazon could bring 1% of U.S. consumers into the streaming marketplace and steal another 1% from other providers. Even if successful, the likelihood of Amazon stealing a large portion of market share from other streaming services or significantly expanding the market seems minimal for now.
But this is Amazon we’re talking about. Count them out at your own risk.