Amazon and Google Shoot back at Spotify with New Streaming Services

Last week, Amazon released an ad-free free streaming service called Amazon Music Unlimited. This service is available exclusively with Amazon Alexa Products and can be voice-activated by your devices at home. Similarly, Google has launched a free streaming service as well that be activated and used with Google Homes. This is unfortunate considering that almost 2 weeks ago, Spotify was gifting premium subscribers free Google Home Minis! How the tables have turned…

A Spotify premium subscription runs $9.99CAD and goes down to $4.99CAD for a student discount. Since launch of the Swedish based company, Spotify has followed the freemium model, believing that if you offer a certain portion of your service for free but run advertisements, many users will eventually opt to pay for the full service for uninterrupted music. This has worked so far but how will they combat the new competition change? Amazon is offering access to a selection of ad-supported top playlists and stations for free on compatible Alexa devices and Google are offering free streaming for Youtube Music on their home devices. Comparing numbers, Google’s ad campaign for 2018 was approximated over $30 Billion and Amazon’s turning over $16 Billion which both over shadow Spotify’s $600 Million.

Amazon's Echo Dot

Going into the Alexa-locked Amazon service, purchasing an Alexa device such as the Echo Dot will cost you about $50CAD, but now you have the ability to stream your music for free. Google’s service can be accessed through any Google product, which gives it that much more of an edge on Amazon. Although it will run ads, it definitely will be a cool feature to have around the house.

With the new services from both companies, it will ideally persuade more consumers to purchase Google Homes and Amazon Echo products where they can voice activate their music. The promotion of the streaming services from were both hushed and not foreseen by the public, but once word was out, Spotify’s stock took a dive. On top of all the bad press with the lack of pay for artists and musicians, things may not be looking too bright for the leading streaming service in the world. This is not good news for investors who have purchased company shares on the NYSE It will be interesting to see Spotify’s counter plan .

Daniel Ek (CEO of Spotify)