Amazon in talks with record labels about subscription music service
Subscription music is all the rage with the big Web music stores — Subscription music services have yet to profit but that hasn't stopped some of the internet's biggest media distributors from jumping into the business.
Context & Ripple Effects
Amazon's reported label discussions extend a music-rights push that included a 2011 effort to secure music deals and cloud-music rights negotiations in 2012. The timing matters because subscription services are confirmed not yet to be profitable, while Spotify is pressing labels for lower costs and broader mobile free access.
First-order effects
- Record labels gain Amazon as a prospective additional negotiating counterparty for subscription rights, while Amazon must test whether licensing terms can support a business model that has not yet proven profitable.
Second-order effects
- Spotify's cost negotiations with labels face a more crowded buyer landscape: an Amazon service, if agreed, would give labels another route to monetize catalog access and strengthen their bargaining position.
Third-order effects
- If major web distributors keep pursuing music subscriptions despite weak profitability, licensing access and scale are likely to become the industry’s central competitive constraints rather than standalone music-store sales.
The trend: Digital music distributors are shifting from individual purchases and cloud lockers toward recurring-access services, with label economics determining which entrants can sustain the model.