Amazon Launches Prime Music Streaming Service

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Madonna is one of the artists whose music is included in Amazon's Prime Music service.

The tech giant, which is reportedly releasing a smartphone next week, takes on Apple on another front.

Amazon has launched a free music-streaming service called Prime Music, available to Amazon Prime subscribers.

The tech giant, which unveiled Prime Music on Thursday, boasts that it’s offering more than a million songs and hundreds of playlists.

The playlists are programmed by experts, with users able to select from Amazon’s pre-created mixes, arranged by genre, occasion, artist, mood and activity.

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Still, Amazon’s offering doesn’t include songs from Universal Music Group, which features artists like Taylor Swift, Jay-Z, Justin Bieber, Iggy Azalea and Lady Gaga, since the label reportedly has yet to reach a deal with the tech company. The service is also only available to Prime members in the U.S.

Universal didn't reach a deal with Amazon because it disagreed with the value of the lump-sum royalty payment on offer for the albums in question, according to two people familiar with the matter. One said the royalty amounted to about $40 million to $50 million for the entire music industry over two years.

Labels other than Universal concluded the amount would be equal to or better than a per-play streaming royalty, given how often the songs were played on other digital services, the person said. Neither source was authorized to speak publicly, and both spoke on condition of anonymity.

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The service also doesn’t include tracks released in the past six months for a number of popular artists.

Amazon says Prime Music won’t feature any playback restrictions, allowing users to skip as many songs as they want, repeat their favorite song, or download music to a mobile device to listen offline. Users’ Prime Music collection is stored in the cloud.

In addition to online radio and streaming services such as Pandora and Spotify, Prime Music also takes on Apple’s iTunes radio.

Amazon is also reportedly set to release a smartphone next Wednesday, with Prime Music likely to be integrated with the device, marking another challenge to Apple.

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Although Prime Music has no additional cost for Prime members, the Amazon Prime service costs $99 a year for new members, following a recent price increase from $79 a year.

Steve Boom, Amazon's vp digital music, said the service will pay for itself and isn't part of the reason why the company raised the price of Prime from $79 in March, a move Amazon said would cover higher shipping costs. Instead, the company will benefit because Prime members tend to buy more from Amazon and remain loyal customers.

"If they come to Amazon for their music needs, they become better and longer-term Amazon customers, and we think that's a good thing," Boom said.

The deal comes on the heels of Apple's announcement that it is purchasing headphone and music-streaming company Beats for $3 billion and is a further acknowledgement of the rise in popularity of streaming and the decline of digital downloads. U.S. sales of downloaded songs slipped 1 percent last year to $2.8 billion while streaming music revenue surged 39 percent to $1.4 billion, according to the Recording Industry Association of America.

Information from the Associated Press was used in this report.