Amazon reportedly exploring free, ad-supported music streaming service, Spotify shares slip

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Amazon is working on a new free, ad-supported streaming music service, ratcheting up its challenge to Spotify, according to a new report.

Citing sources familiar with the plans, Billboard reported that Amazon is in talks to launch the music service as soon as this week. Amazon plans to market the service, which would offer a limited catalog of music at first, through its network of Echo smart speakers, according to Billboard.

We’ve reached out to Amazon and will update this story if we hear back.

Shares in Spotify, which offers both a paid and free music service, were down more than 4 percent in early morning trading Monday.

Amazon isn’t new to the music streaming game. Prime members get access to more than 2 million songs through Prime Music. The tech giant’s beefier music service, Amazon Music Unlimited, offers more than 50 million songs. However, it costs Prime members an additional $7.99 per month — $9.99 for everybody else — and Echo-only listeners can get it for $3.99 a month.

Spotify went public just under a year ago, and since then, its stock has declined roughly 14 percent. The streaming company reports a paid subscriber base of 96 million, with another 116 million using the free option, per its most recent quarterly earnings report.

Amazon does not break out its user base for Prime Music and Amazon Music Unlimited, so it’s tough to compare where the two companies stand against one another. Amazon did share last year that it has more than 100 million Prime members across the globe, giving it a pretty large potential audience for Prime Music. However, it’s unclear how many of those Prime members actually use the service.

A free, ad-supported streaming service would give Amazon another way to bring in revenue from advertisers and grow its user base at the same time. Spotify’s free service makes up nearly 56 percent of its total audience, however it only accounts for 12 percent of total revenue.