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Will The New Cheap Tier From Pandora And Amazon Be Worth It?

This article is more than 7 years old.

Ever since music streaming began in earnest, there’s been a mantra inside the music industry that’s gone something like this: “Until the paid subscription rate gets to $5 per month, streaming is never going to scale.” That’s only partially been true, as subscriber numbers have grown steadily at the now standard $10 per month, but not to the level that the industry wanted or expected. The question is, will they truly take off even when they reach $5?

It looks like we might know soon enough as Pandora is reportedly about to launch a brand new service at that magic price, with Amazon to follow shortly thereafter.

But is what you get for that $5 going to be worth it?

According to The New York Times, Pandora’s $5 tier is just another version of its other tiers, but with the ability to skip more songs and store several hours of playlists. And Amazon’s $5 tier will only apply to owners of its Echo smart speaker. That sort of limits the reach of these $5 tiers a bit, don’t you think?

While all streaming services are feeling the pressure to reduce prices, they’re bound by their agreements with the major record labels, which doesn’t provide a lot of wiggle room for lower prices. In fact, it’s rumored that Apple wanted to set the price of its Apple Music to $8 at launch but that idea was quickly laid to rest by the major label’s powers-that-be.

Pandora and Amazon dipping their toes in the $5 water could be a gateway to a new round of streaming discounts though. Whenever Spotify runs a sale (like the recent $3 for three months student special) its paid subscriber numbers rise pretty quickly, although it’s yet to be seen what the churn rate for those new subscribers is. That’s not enough evidence for the labels however, who still cling to the $10 per month price point as the floor that will never go lower.

Those $5 tiers are nice and all, but the problem is that Pandora’s and Amazon’s offerings may not be enough of an incentive to really boost overall subscriber numbers, which could be a major impediment in any further label negotiation.

These are not just token programs however. Pandora’s about to roll out its $10 per month interactive streaming service (it’s been a non-interactive webcast to this point), so there will be plenty of hype in the process. Then there’s Amazon’s Echo, which really seems to be catching on. Its dedicated $5 tier will be full-service, as long as you have a unit.

Streaming music consumers may not be getting the low monthly prices that they want for the services they want, but at least there’s some movement in that direction, which is a good sign of potential things to come.

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