Amazon launched a streaming music service Thursday for its Prime subscription customers. Prime customers pay $99 a year in exchange for free two-day shipping on many items in the Amazon store, as well as the ability to stream movies, borrow e-books and, now, listen to a library of songs from major artists.
Prime Music includes over a million songs and does not have ads. But Amazon's service lacks many of the draws of Pandora and iTunes radio, making it unlikely to steal these services' existing customers.
Amazon Prime Music doesn't fare to well in a head to head comparison with Pandora. Like Amazon, Pandora has a library of more than a million songs, according to Pandora founder Tim Westergen's comments at a September Goldman Sachs conference.
However, Pandora also has a "today's hits" station that plays new releases. Most of the songs on Amazon Prime Music will be six months old, according to a Wall Street Journal report, and Amazon's library does not include songs from Universal Music Group, the largest record label.
Pandora also enables music discovery. The company's proprietary algorithm analyzes songs and picks similar tracks, enabling a listener to hear more music that they might enjoy rather than keep listening to the same old songs that listeners might even own already.
Moreover, Pandora is cheaper. An ad-free Pandora subscription is just $4.99 a month, or $60 a year. Prime membership costs $99 a year, although it comes with far more than a music streaming service.
Pandora's stock rose 0.8% by noon, after the news. Amazon shares fell 1.75% as investors bet that the service would not steal Pandora's user base.