Amazon has teamed up with Universal Music and Warner Music to remaster thousands of popular streaming tracks to better-than-CD audio quality, as the music industry tries to lure listeners to pricier subscriptions.
In addition to a standard $10 a month streaming service comparable to Spotify, Amazon offers a high-definition option that delivers songs to smartphones at CD sound quality or better. This service costs $15 a month, or $13 a month for members of its Prime shipping programme.
The ecommerce group has spent the past year working to boost its pricier streaming service with albums from stars including Lady Gaga, Nirvana, Ariana Grande and Bob Marley in what it calls “ultra high-definition”.
To do so, Universal Music went back to the original recordings of albums such as Diana Ross and Marvin Gaye’s Diana & Marvin and worked with sound engineers to remaster them. Amazon says the audio will “reveal nuances that were once flattened in files compressed for digital streaming or CD manufacturing”.
The move comes as the inflow of cash from music streaming has slowed over the past year as the market matures. Spotify has continued to add millions of subscribers every quarter, but many of these new customers are in emerging markets where the prices are lower, leading to a decline in the average price paid by subscribers. Discounts, promotions and family plans have further eroded this.
The average revenue Spotify makes per user has been dropping for years, from €6.20 in 2016 to €4.72 last year. That decline filters through to the biggest music companies — Universal, Warner and Sony — who depend on royalty payments from Spotify.
There is a “real business case to take high-quality audio to the mainstream”, Steve Boom, Amazon’s head of music, told the Financial Times in an interview.
As streaming has become mainstream in the US and Europe, Amazon is betting that sound quality will give it an advantage in the battle for customers. The only other big music service that offers high-definition streaming is Tidal, at a cost of at least $20 a month. Amazon in January said it had 55m music users.
“We’re not marketing this to be just for audiophiles,” Mr Boom said. “Our focus is making this mainstream”.
Amazon a year ago introduced Amazon HD, which offered songs in higher-quality audio for an extra $5 a month. Spotify, the market leader with 138m paying subscribers, has resisted raising its prices.
“[Amazon HD] is pretty much the only lever the record labels have at the moment to increase prices,” said Mark Mulligan, analyst at Midia Research.
Michael Nash, Universal’s head of digital strategy, said the high-definition push would help “direct business towards a higher [price] tier” and “enhance monetisation of [streaming] users”.
Mr Boom said he was “very happy” with sign-ups to Amazon Music HD, but declined to give specific numbers. The company does not disclose its revenues from music, but analysts estimate them to be a small fraction of its overall business.