The music-streaming war heats up with
Amazon
’s
AMZN
strong efforts to bolster the content library of Amazon Music — the company’s music streaming service.
Amazon entered an agreement to acquire a podcast network, Wondery, which testifies the aforesaid fact. Upon the closing of this deal, Wondery will be added to Amazon Music, which, in turn, will enhance the company’s offering in the booming music streaming space.
The company will be able to deliver a better listening experience with more creators and hosts creating podcasts. Notably, Wondery is well-known for creating and producing top-rated podcasts such as Business Wars, Dirty John, Dr. Death and The Shrink Next Door.
The deal is expected to benefit both companies. Wondery will be able to offer high-quality content with Amazon Music.
Alternatively, the latest move bodes well for Amazon’s deepening focus on providing enhanced user experience, per customers’ growing preferences for podcasts.
We believe that the move is likely to boost Amazon’s competitive prowess against
Apple
AAPL
,
Alphabet
GOOGL
,
Spotify
SPOT
and
Sirius XM
SIRI
, which are also leaving no stone unturned to expand their footprints in the music streaming market, which holds immense growth promises.
A Statista report shows that the market is expected to have generated $19.7 billion in revenues for2020 and the figure is expected to hit $33.4 billion by 2025, witnessing a CAGR of 11.1%.
Additionally, the user penetration rate in the market is likely to have hit 7.3% in 2020. The figure is expected to reach 11.6% by 2025.
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Is Amazon Placed Well?
The Wondery deal indicates Amazon’s aggressiveness toward gaining share in the music streaming market. Moreover, the deal is in sync with the company’s focus on the podcast library.
In September 2020, the e-commerce giant launched podcasts for the first time on its music streaming app, which were made available in the United States, the U.K., Germany and Japan.
Top, popular and new podcasts are streaming on Amazon Music. Further, many original podcasts hosted by Will Smith, Dan Patrick, DJ Khaled and Becky G are available. These podcasts can also be accessed from Amazon Echo smart speaker in addition to the Amazon Music app.
Apart from podcasts, Amazon, which currently carries a Zacks Rank #3 (Hold), took a ground-breaking step in the streaming world by integrating Amazon Music with Twitch’s live-streaming feature. The move offers various options to users to explore live streaming of their favorite artists on the Amazon Music app.
Further, the launch of the Amazon Music for Artists app, which helps artists to link their Twitch channel with Amazon Music, remains a major positive.
In addition to these, the company’s ad-supported free versions of Amazon Music and Amazon Music HD, featuring HD music quality, have gained solid customer momentum.
With the above-mentioned endeavors, Amazon remains well-poised to capitalize on the growth potential present in the music streaming space.
Should Spotify & Sirius XM Worry?
Amazon’s strong push toward podcasts and efforts to bolster the offerings of Amazon Music are likely to pose a serious threat to Spotify and Sirius XM, which are considered to be notable players among others.
However, it is hard to ignore their music-streaming initiatives. Spotify is continuously gaining from the expanding paid subscriber base on the back of its strong promotions. Additionally, the company’s deep focus on expanding podcast content remains a major positive. The acquisitions of two podcast networks, Gimlet and Anchor, enabled the company to strengthen its offerings.
Further, its compatibility with smart speakers and robust playlists remain major positives. Moreover, this Zacks Rank #3 company has set up a strong conversion pipeline from free listeners to paid subscribers.
Conversely, Sirius’ acquisition of Pandora remains astrong step in this particular space. Additionally, the company’s recent buyout of Stitcher— a podcast pioneer — reflects its focus on podcasts. Additionally, the acquisition of Simplecast, a podcast management platform, bolstered its advertising capabilities on the Pandora platform.
We note that the company’s expanded podcast efforts are expected to improve monetization for the broader podcast platform. Further, Sirius’ curated commercial-free streaming music channels on its streaming platform position it well for delivering an enhanced experience to users.
How Does Apple & Google Fare in the Race?
Apple has been gaining steam in the music streaming market on the back of solid content, with more than 70 million songsand the expanding Apple Music subscriber base, which stands above the 60 million mark.
This Zacks Rank #3 company recently made Apple Music available on Google Nest Audio, Nest Mini and Lenovo smart speakers, using Google Assistant.
Further, the company re-launched its Apple Music beta website to add a Listen Now feature that replaces the For You tab from the standard Apple Music website. The interface allows subscribers to stream their favorite music from their Internet browser rather than installing iTunes or the separate Apple Music app.
Additionally, Apple announced the launch of Apple Music TV, a 24-hour live stream of popular music videos.
Meanwhile, Alphabet’s Google has been making advances in the market over the past few years.
The company’s on-demand music streaming service, YouTube Music, is driving momentum in the market by leveraging the popularity of YouTube and the capabilities of its ML techniques.
Further, the company’s free version of its music-streaming service is bolstering its customer reach.
Additionally, it is adding latest features to YouTube Music in a bid to deliver an enhanced experience. The company is replacing the ‘Hotlist’ feature with a new feature called ‘Explore’, which will help users to explore and enjoy new music and artists. Within Explore there are two tabs — New Releases, and Moods & Genres.
Currently, Google’s parent Alphabet carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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