BUCKLE UP: AMAZON IS SPENDING CRAZY MONEY ON ENTERTAINMENT. AND IT HASN’T EVEN STARTED ON MUSIC…
JULY 31, 2015 BY TIM INGHAM
A few months back, MBW suggested that a tide was turning in terms of rights ownership: Amazon and Apple were morphing into content creators, and the natural next step was for both leviathans to become record labels.
This was incorrect.
Because Amazon is already a record label.
There was no grand launch, it required a mere modicum of investment and it’s largely a by-product of its other activities.
But the fact remains that ‘Amazon Content Services’ (the online giant might want to work on the sexiness of that brand at some point) has been directly commissioning, funding and distributing recorded music projects for over a year now.
The first prominent effort was the soundtrack to its Golden Globe-winning series Transparent; a US black comedy which tells the story of a family readjusting to life with a transgender father.
The second was a little more traditional; a one-off playlist called ‘All Is Bright’, which saw recording stars such as Liz Phair, Yoko Ono, The Flaming Lips and Beth Orton lay down original versions of traditional Christmas songs – all on Amazon’s dime.
A light dabble in the world of music ownership, or is Amazon getting a taste for it?
Interestingly, if you visit the US Amazon homepage today, you’ll find a big fat ad for a newly-commissioned original playlist – like All is Bright, heavily branded with Amazon’s own streaming service, Prime Music.
Amazon Acoustics features ‘some of our favourite artists getting intimate… with unplugged covers and originals’.
Once again, this appears to have been bankrolled, label-style, by the e-tail giant.
Which all makes yesterday’s big news in the world of TV much more intriguing.
If you haven’t heard, Amazon Prime Instant Video has snaffled the exclusive rights to one of traditional broadcasting’s biggest global brands: team Top Gear – aka Jeremy Clarkson, Richard Hammond and James May.
This was a serious bidding war – and Amazon trumped all-comers.
The FT reports that Amazon paid $250m (yes, a quarter of a billion dollars) for the rights – beating both traditional broadcasters and fierce rival Netflix to the signature.
For comparison’s sake, that’s $50m more than Sony paid to buy out The Orchard.
Meanwhile, Amazon is also busy creating its own theatrical movies via Amazon Studios – a production house which aims to finance 12 films in 2015.
“Filmmakers too often struggle to mount fresh and daring stories that deserve an audience,” said Amazon when announcing its move into movies in January.
Aka: We have loads of money, and we’re willing to back interesting projects that will become ‘catalogue’ sellers – not just blockbuster popcorn fodder.
Sitting still is not in Amazon’s DNA.
This quote, from head honcho Jeff Bezos, speaks volumes: what is new and exciting right now can become drab and moribund in no time. Beware.
The music business knows how it feels to crash and burn in this rodeo. The CD era was, quite literally, shiny as hell.
Now we’re being bedazzled again: streaming is glimmering everywhere you look in this business – and magpie eyes are hungry for the prize.
But Bezos is no feet-first buffoon.
His 21 years at Amazon have been marked by a balancing act: launching cool new things, and having the patience to work out how he can win at them.
Amazon Prime Music is a perfect example.
While the music industry has been transfixed by the Spotify/Apple Music dust-up, Amazon has been plotting a truly mainstream roll-out.
Signing up to its music streaming service comes with a host of side benefits – including one-day Prime delivery, Prime Video, an e-book rental service, a photo cloud storage locker and much more besides.
It does so for $99/£79 a year. That’s more than a third cheaper than an annual Spotify subscription.
“OUR CUSTOMERS LOVED [AMAZON’S ORIGINAL MUSIC RELEASE]. KEEP AN EYE OUT FOR WHAT WE GET UP TO NEXT.”
As covered earlier this week, Prime has an estimated 40m-50m paying customers… more than double the people currently paying for Daniel Ek’s service.
The benefits of funding and delivering original entertainment content to this huge audience is not lost on Paul Firth, Head Of Music at Amazon UK.
Asked about Amazon’s own ‘All Is Bright’ playlist, he says: “Our customers loved it, and it was a completely original production.
“Keep and eye out for what we get up to next.”
Firth confirms that this project was made feasible through “direct deals with the performers”, but is tight-lipped on who owns what rights.
He points out that Amazon’s ability to bankroll music doesn’t end at audio, either.
“About a year in advance of us launching Prime Music in the UK, we started working with Prime Instant Video to film a few gigs,” he says.
“These included Paul Weller, Ed Sheeran the Kaiser Chiefs live and a Christmas Carol concert at Abbey Road.
“Prime Instant Video becoming somewhere people expect to watch music is hugely exciting.
“The opportunity in time to perhaps use Prime Instant Video for music discovery with a video focus is very interesting.”
You heard the man. Watch out Vevo.
So can Amazon really do battle with Spotify and Apple Music – whose catalogues hover around the 30m mark – with a comparatively puny selection of just one million?
MBW understands that the reason Universal Music Group continues to refuse to license the service – now over a year old in the US – is because it’s holding out for a revenue share deal.
Yet the majority of current Prime members are not yet engaging with the shiny (there’s that word again) new streaming Music addition.
As such, sources tell us, Amazon believes that deals based directly on streaming usage are more appropriate.
That’s what it’s agreed with Warner and Sony, whose artists make up the vast majority of the million tracks on the platform.
“The truth is we don’t need to be No.1,” says Firth. “This isn’t a zero sum game for us.
“We don’t need other services to fail for us to succeed.
“THIS ISN’T A ZERO SUM GAME FOR US. WE DON’T NEED OTHERS TO FAIL FOR US TO SUCCEED.”
“We are targeting, we think, a different group of consumers.”
Over to Jeff Bezos, and another telling quote about Amazon’s market strategy – one that will repulse those business affairs battlers at UMG:
“There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.”
Adds Firth: “We have 15 years of experience selling music in the UK, so we really know our customers.
“And we know from our own sales history that for many of them, who clearly love music, £120 a year is a lot of money.
“We always aim to give customers choice, convenience and value.
“Prime is great value, and when you think about choice, we’re the only people to offer the choice of buying it on vinyl or CD – both with [instant free mp3 service] AutoRip, of course – plus downloading or streaming.
“Again, through our experience, we know there aren’t a lot of customers who will shop beyond a catalogue of a million songs.
“That Prime Music catalogue will grow in future, just as it has done in the US – where it’s a good deal bigger a year after launch.”
Amazon doesn’t necessarily have to rival record labels to achieve this aim.
Apple Music recently funded music videos for the likes of Pharrell Williams, Drake and Eminem – in exchange for a bit of exclusive distribution.
Just as with Amazon Studio’s pledge to back “fresh and daring” creators, one artist whose video was subsidised by the bank of Apple was Madisen Ward & The Mama Bear.
Signed to US indie Glassnote, a video for their track ‘Silent Movies’ was funded and hosted exclusively by Apple Music last month.
“Madisen had a specific vision for this video and Apple’s involvement really helped.”
This kind of activity is clearly not top of the agenda for Amazon Prime Music just yet – which is concentrating on making a splash with the catalogue it’s been permitted to license.
Firth is keen to express his excitement for labels in the wake of Amazon’s decision to push Prime Music hard on its homepage, which reaches 175m+ people a month.
“The visibility that Prime Music’s UK launch has been given by Amazon says everything,” he comments.
“It is bringing new customers to music in all of the ways we offer it.
“About two thirds of active users on Prime Music in the US have also purchased [music] from us in the past year.”
“THE [TEAM TOP GEAR DEAL] SHOWS THE SCALE OF AMAZON’S AMBITION. IT’S A HUGE ACQUISITION.”
But Firth, like all good Amazon employees, won’t just remain satisfied with a positive start.
After all, things only remain shiny for so long.
Echoing Bezos’s philosophy, Firth says that for Prime Music, “Growth is our primary focus. We know there’s a large addressable audience out there.”
What about that megabucks Team Top Gear deal, then?
What does it tell us about the possibilities for Prime, its monetary power and, potentially, Amazon’s role as a music financier, in the years to come?
“It really shows the scale of Amazon’s ambition,” he replies.
“Whether you love or loathe Top Gear, you can’t argue against the fact it’s a huge acquisition.
“I’m really excited about the statement it makes – and what it shows we’re capable of delivering.”Music Business Worldwide