Amazon Music app in a smartphone
Technology

The rise of music streaming services in Latin America: how Amazon Music became Spotify’s biggest challenger

Amazon Music is the fast-growing music streaming service in the world, and Latin America is its next target

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A few years ago, the sale of Compact Discs or CDs dominated the music industry. The physical distribution of music defined which artists got a taste of glory in their careers after being awarded the coveted gold and platinum discs for their success in sales. The flip side is that it also determined who would not be successful, because their work simply didn’t correspond to the sales expectations of the music industry.

Such a context seemed absolute, until a revolution completely changed the course of the industry. Music streaming emerged in response to a need that at the time seemed impossible: to democratize the way in which music was distributed after the retirement of CDs. This, however, did not happen without the resistance of record labels and even well-known artists, such as Taylor Swift who was against that type of business model even as streaming services gained more and more popularity.

Taylor Swift at the American Music Awards 2018. Photo: Kathy Hutchins/Shutterstock.

The American singer believed that compensation offered was unfair, especially for independent artists. “Music is art, and art is important and rare. Rare and important things are valuable. Valuable things should be paid for. It is my opinion that music should not be free,” wrote the singer in an essay to Wall Street Journal in 2014, explaining her decision.

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Yet it was impossible to contain the evolution of the music industry, for record labels needed to re-invent themselves in order to become financially viable in a completely new and digital scenario. Meanwhile, even great artists as Taylor Swift were forced to accept this natural change in the habits of their fans—the singer made her music available through streaming platforms and recently reached the milestone of 1 billion playbacks in her new album “Lover” in Spotify.

This is far from being the only revolution that the music industry will have to face, for there is a new chapter about to be written. In the last few years, Spotify dominated the global market with its wager on the success of its platform in emerging regions like Latin America, where the platform crowned the summit of its audience with the help of listeners from metropolis such as Mexico City, categorized as the city with the most subscribers to Spotify in the world. But maintaining such a leadership may not be so easy in the near future.

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The potential of streaming services in the music industry has not gone unnoticed by other giants and, even if Spotify has surprisingly exceeded the figures of Apple Music, a new challenger approaches under the name Amazon Music, set to become a big obstacle – not to mention Deezer, with 14 million users worldwide and also growing in Latin America.

Amazon Music, the “dark horse” of the streaming market

Neither Apple, nor Spotify. The music streaming service whose growth rate is highest at a global scale is that of Amazon Music. While Spotify celebrates the achievement of 100 million subscribers, with a growth of 25% the previous year, gambling on strategies focused on the public located in emerging countries, so as to increase their reach—as is the case with its focus on India and the launch of a new light version of its app for regions with an unstable Internet connection—Amazon Music is amping up the tempo of its results.

Amazon is the dark horse [in music]. People don’t pay as much attention to it [as to Apple and Spotify], but it’s been hugely effective.

Mark Mulligan, an analyst at Midia Research in an interview to the Financial Times.

Considering the inclusion of the music platform in the subscription of Amazon Prime and the link with the virtual assistant of the brand, Alexa, Amazon Music reached a growth of 70% in the number of subscribers in the past year, becoming a significant player in the global market in music streaming services, for the first time since its launch in 2016, according to information provided by the Financial Times.

With a similar hand as the one played by Spotify in emerging markets to rapidly scale its results, so has Amazon Music invested in filling the market’s gap: provide services to a mature public, avoiding the struggle for younger listeners in which the Swedish company and Apple is already taking place.

In an interview with the Financial Times, the head of Amazon Music Steve Boom explained the company’s perspective in taking such an approach: “We’re not battling for the same customers as everyone else, for the industry to reach its full potential, we can’t just look at 15- to 22-year-olds,” he said.

Amazon Music vs. Spotify: the battle for Latin America

Traditionally known as one of the primary markets for Spotify worldwide, Latin America has become more than a source of subscribers, for the ascension of reggaeton in the music industry has made the region a fertile ground for emergence of new and promising artists.

Latin music has always been present, but now the streaming universe has transformed it into something global.

Inigo Zabala, chief executive of Warner Music in Latin America in an interview with the Financial Times.

And now Amazon Music also wants tap into that market share with ample space for growth. The music streaming platform was officially launched in Brazil on September 12th, 2019—right after the arrival of Amazon Prime in the country with a combo that went a step further and included video streaming services, access to specific ebooks, and the benefits of its e-commerce.

But while the subscribers of Amazon Prime will have access to a portfolio of 2 million songs, the subscription to Music Unlimited will make available a much larger variety of close to 50 million songs, a similar number to that offered by Spotify.

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The ace up Amazon’s sleeve is the price of its streaming services. The individual plans of Music Unlimited, as well as those of its primary competitors Spotify, Apple Music, and Deezer, remain at BRL 16.90; while the subscription rate of Amazon Prime’s basic streaming service with all the other benefits included in the combo has a monthly value of BRL 9.90 and a yearly value of BRL 89.90, making it the best cost-benefit option in the market.

Even if it has close to 32 million subscribers globally, a small part of the global figure held by Spotify at 100 million, Amazon is not in the music streaming market to play games.

Latin America has become a center stage for the music industry worldwide, and everyone is ready to fight for a space in that market. With more qualified competition, basic packages with reduced values and a decentralized market, the region’s audiences should be tapped into for all its potential. And in the end, whoever wants to enjoy the show are its users, with more options and different cost-benefits.