Amazon Expands Music Catalog and Podcasts Ad-Free for Prime Members

The tech giant is essentially offering its Prime members the full functionality of Spotify’s free tier but without ads. While paid tiers allow users to select any specific song on-demand, free tiers are more limited in that users can only listen by shuffling albums, playlists and artists’ catalogs. Amazon also offers Prime users a few all-access playlists to which they can listen on-demand.

Amazon’s new features for Prime users highlights a new battleground for retailers with membership programs, such as

Costco Wholesale Corp.

and

Walmart Inc.,

which are working to bundle streaming services and other features. Entertainment companies are also bundling more offerings into their flagship apps, including

Walt Disney Co.

, which plans to expand its Disney+ app to include theme park and merchandise promotions.

Amazon Music has long benefited from its placement under its Prime membership umbrella, which in addition to online shopping, now includes groceries, gaming, TV and film streaming, as well as books. The third-largest music service by subscriptions, behind Spotify and Apple Music, Amazon has drawn a diverse and older listening base across the U.S.—many of them first-time streamers—in large part through its Prime subscription service and voice-activated

Echo

speakers, analysts and executives say. Listeners can also access music and podcasts through the Amazon Music app.

Shares of Amazon fell 4.7% Tuesday to $97.63, more than the other big tech companies. Separately, YouTube launched an online marketplace for streaming video services.

The new music and podcasts for Prime members mark another challenge to music streaming competitors such as

Apple Inc.’s

Apple Music, which raised its monthly subscription fee by a dollar last week, and

Spotify Technology SA,

whose Chief Executive

Daniel Ek

said last week that it would likely raise prices in 2023.

Prime’s music offering has served as an on-ramp to Amazon Music Unlimited, its full-service on-demand subscription for $9.99 a month, or $8.99 for members. In addition to family and student plans—which other services also carry—it has a single-device plan, which allows Amazon Music Unlimited access to one Echo or Fire TV device for $4.99 a month.

Through these various subscription plans, Amazon’s music subscriber base is one of the fastest-growing, according to media data tracker Midia Research. Amazon could take over Apple Music in the next year as the No. 2 music service by subscriptions, Midia analyst

Mark Mulligan

said.

Amazon Music Vice President

Steve Boom

said when Prime began offering music in 2014, streaming wasn’t yet mainstream, and the idea was to give people who weren’t ready to subscribe to $10-a-month service an entry point into the marketplace.

“Things have changed. As we’ve talked to people who have used music in Prime, they want access to a full catalog of music,” he said. “It was time for us to expand and update the offering to match customer expectations today.”

In 2019 it introduced a high-definition streaming tier, envisioning bringing better sound quality to the masses at $12.99 a month for Prime members and $14.99 a month for nonmembers. But in May 2021, it ditched the tier and made HD, ultra-HD and spatial audio available at no additional cost to Amazon Music Unlimited subscribers.

By offering the music to Prime members without ads, Amazon will have to shoulder a potentially higher cost of payments to record labels depending on how much more users stream.

Amazon Prime remains one of the most successful subscription services, with more than 200 million members worldwide. Most people who sign up for its services stick around; Amazon holds on to about 98% of Prime customers who have subscribed for at least two years, according to Consumer Intelligence Research Partners.

That dominance, however, has shown signs of stagnation lately. After years of fast growth, Amazon’s core retail business slowed this year, and its market share has appeared to plateau. Prime subscriptions have also slowed. Annual growth in Prime subscriptions in the U.S., once nearly 20%, will slow to 2% by 2025, research firm Insider Intelligence predicted earlier this year. Faced with that reality, Amazon has been under pressure to entice customers with added services.

Amazon has raised its price for Prime over the years, most recently by $20-a-year this past March, and has expanded the entertainment it offers through the subscription service. That has included massive investments like hosting the National Football League’s Thursday Night Football and its recently released “Lord of the Rings” series on Prime Video. Before the March price increase, Amazon raised the cost of a Prime membership in 2018 and 2014.

Mr. Mulligan said Amazon is shifting more emphasis to its entertainment offerings, which should help it as consumers re-evaluate their spending amid rising economic pressures.

“When it launched it was a free shipping service and music was a deal sweetener. Now that’s changed—it’s a subscription service that has entertainment and free shipping,” he said.

Amazon is also rolling out free access for members to a selection of podcasts, ad-free, including most of its Wondery catalog of premium shows as well as top shows from the

New York Times,

Barstool Sports, NPR, Slate, ESPN and other major publishers.

Amazon launched into podcasting two years ago, and has played catch up with Spotify and Apple by creating original exclusive shows, spending $300 million to buy Wondery—then a startup known for its chart-topping gritty, narrative-driven shows such as “Dr. Death” and “Dirty John”—and acquiring exclusive rights to “SmartLess,” the popular interview show with Jason Bateman, Sean Hayes and Will Arnett.

Mr. Boom said he doesn’t think there has been much innovation in the customer experience with podcasts. Amazon is also introducing podcast previews feature to give customers a short, digestible sound bite from an episode to help them find new shows.

—Sebastian Herrera contributed to this article.

Write to Anne Steele at [email protected]