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This Could Be Amazon’s Worst Idea Since the Fire Phone

The leading online retailer is reportedly about to make a big splash in digital music, but a half-priced offering may be all washed up.

Amazon.com (NASDAQ:AMZN) rarely makes mistakes, but it may be about to stumble in the potential pursuit of standing out in the crowded digital music market. Recode is reporting that Amazon could roll out a premium music subscription service as early as next month.

That’s a brazen move. Offering a smorgasbord of unlimited on-demand tunes for $10 a month is a market where few outside of Spotify and Apple (NASDAQ:AAPL) have succeeded. Spotify was early, and the international darling was the first to get it right. Apple Music has made a dent in this niche because of the iPhone’s success and its earlier market dominance when downloading music was the aural consumption platform of choice.

That’s about it when it comes to winning with on-demand tunes. The cash-rich tech giants behind Xbox and Android haven’t been able to shine through in this market, and Amazon will face an even more challenging experience as a late arrival. The move at least makes some sense since it has already been offering a limited catalog of tracks to Amazon Prime subscribers at no additional cost, but its chances of success here are slim.

However, the real gamble for Amazon is that Recode‘s also reporting that Amazon plans to also offer a discounted service of the same on-demand platform that will be exclusively for Amazon Echo devices. Folks would pay $4 to $5 a month to access streaming music only on the voice-activated, internet-tethered hands-free speaker. That’s not going to be much of a market.

Echo chamber

I’ve owned Echo since Amazon’s introductory offer that made it half-priced for Amazon Prime members early last year. It’s a useful gadget to have around at best, and a novelty conversation piece when guests come over at worst. However, the reason why the rumored discounted service will flop is because I can’t imagine anyone that would want to only stream on-demand music through Echo.

Satellite radio has been a hard sell outside of the car. Spotify and Apple Music sign up most of their users via mobile devices. Premium music is something that works when people are on the move. It’s the soundtrack on the drive. It’s the score for the gym.

There is certainly a time to blast music through a modest speaker of serviceable but not ideal quality, but it’s most certainly not the only time that you want to be streaming your favorite playlist or that new album that you’ve been meaning to hear. That’s the rub with a half-priced music service that won’t follow you on your commute, stroll, or coffee shop visit.

It’s not much of an addressable market. You can already stream Spotify or free ad-supported platforms through Echo. An Amazon Prime subscriber also has access to a decent-sized library without paying more. Echo isn’t smarting for tunes, and even a juicy subscription discount won’t change that.

Music labels wouldn’t let it happen if it was going to be a hit. They would be undoing the value proposition of $10 a month that is already a sacrifice for the industry if half that much would suffice for music fans.

Amazon doesn’t whiff often. The ill-fated Fire smartphone, its Endless.com high-end shopping hub, and Amazon Auctions stand out because the leading e-tailer gets it right so much more often than it gets it wrong. Rolling out a premium music service that only works on a single home-tethered device — if that is in fact what it does next month — would be one of those rare moments where Amazon misreads the market and fails.

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Rick Munarriz owns shares of Apple. The Motley Fool owns shares of and recommends Amazon.com and Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Drew Limsky

Drew Limsky

Editor-in-Chief

BIOGRAPHY

Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.