Everything You Need to Know About Amazon.com's New Music Unlimited

By Markets Fool.com

Image source: Amazon.

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E-commerce giant Amazon.com (NASDAQ: AMZN) has announced a new music streaming offering called Amazon Music Unlimited, offering on-demand streaming of its catalog, which includes tens of millions of songs. Here's everything you need to know.

It's different this time

This new service is different than Prime Music, which launched back in 2014. Prime Music was introduced as an included benefit for Prime members, with no additional cost for access. It was also more limited, offering a relatively smaller number of songs as well as curated playlists. The initial Prime Music catalog contained approximately 1 million songs, and this figure has since grown to about 2 million.

Amazon Music Unlimited is more comparable to Spotify or Apple (NASDAQ: AAPL) Music in terms of the size of the catalog, focusing more on the on-demand selection as opposed to curated playlists.

Prime members get a discount

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This time around, Amazon Music Unlimited will not be included with Prime at no additional cost. However, Amazon is expectedly offering a benefit to Prime members, hoping to encourage more people to sign up for the company's popular membership program. Prime members will pay $8 per month (or $79 per year), while non-Prime customers will pay $10 per month.

That's table stakes for the on-demand music streaming market, as $10 is the going price for pretty much all the major competing services. Amazon says it plans on introducing a family plan later this year for $15 per month, allowing access for up to six family members. It's not clear if there will be different family plan prices for Prime vs. non-Prime customers.

There's an Echo-only option

Considering the runaway success of Amazon's Echo, it makes sense that the company is also offering a slimmed-down version of Music Unlimited. Customers can buy a super-cheap plan for $4 per month that gives full access to the service on a single Echo, Echo Dot, or Amazon Tap device.

Amazon is hoping that it can use Alexa and the Echo family as differentiators, since most of Amazon's rivals have yet to launch stationary speakers powered by virtual assistants. Alphabet just unveiled Google Home, but that device won't ship until November. Meanwhile, Apple is reportedly working on its own version.

Amazon didn't specify how big the catalog is

The company vaguely says that its catalog includes "tens of millions of songs." That suggests there are at least 20 million songs, but Apple and Spotify each boast that their respective catalogs include over 30 million songs. It's possible that Amazon secured all the same licensing deals, but it's also possible that the catalog is smaller, since Amazon didn't specify.

A potentially smaller catalog may not be competitive considering the fact that the price points are comparable (at least for non-Prime members).

Investors will probably never know how successful it is

Amazon has long been a serial offender in terms of investor non-transparency. Even to this day, the company refuses to share data on how many Prime members there are, which is incredibly important to the business. As such, I also wouldn't expect the company to disclose how many Music Unlimited subscribers it's able to garner.

For context, Apple now has 17 million paid subscribers for Apple Music, while Spotify leads the way with 40 million paid users.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A and C shares), 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.