Content Distribution is Amazon’s Prime Suspect for Price Hike

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After months of online chatter about it, it’s finally happened: the annual fee for Amazon Prime has jumped from $79 to $99, and customers will have to determine whether the higher price is still a value. For some users, it’s a no-brainer: access to a wide selection of movies and TV shows through Prime Unlimited Video and the Kindle e-book lending library made the serve well worth the price. By remaking itself into a media company, Amazon has raked in millions in sales. But will Prime members accept the new annual fee? And what can Amazon do to keep its Prime audiences happy?

Give the people what they want

When the Kindle Fire was introduced as a competitor of the Apple iPad just three years ago, Amazon was content to sell it at a loss. It turns out the hardware was Amazon’s retail Trojan horse; what the company lost on the devices, it more than gained in media sales.

Amazon Prime, originally a program that gave frequent Amazon shoppers free two-day shipping and a token library of online media, has become one of the company’s most popular features. In fact, Prime has become a true competitor of video streaming services like Netflix and Hulu.

And with a host of services that allow individuals to create and distribute their own content, Amazon places itself at the center of both content consumption and distribution. With plans for a music service on the horizon, Amazon aims to dominate publishing, video, and music—and with the support of loyal Prime subscribers, it could very well succeed. As long as Amazon can deliver the kind of content its customers want, $99 a year will seem like a steal.

What’s next?

One price hike in almost a decade doesn’t seem (at least to this writer) like highway robbery, but Amazon’s latest move could signal a regular increase in Prime every few years. How could the company use content distribution to keep its customers coming back for Prime time?

Regardless of its most recent reincarnation as a media company, Amazon’s still in the eCommerce business. And in the nine years since Prime’s debut, the number and scope of items and services offered by Prime has increased many times over. For millions of customers Amazon has become, for better or worse, a hipper online Walmart: it’s now common to order everything from shoes to stone-ground grits on the site, and Prime members can get those disparate items in just two days.

By simply offering more of what it does now—by adding more services and expanding its warehouse variety—Amazon can keep customers on its site longer. And eCommerce customers who linger on a website could be more likely to explore the site’s content offerings. Despite this latest rise in price, Prime could actually end up attracting more members just because of how much stuff—both physical and digital—Amazon sells.

Amazon doesn’t publish Prime membership numbers, so it will probably be difficult to determine how much of a dropoff Prime suffers after the $99 price tag goes into effect in April. But it’s safe to say that Amazon shouldn’t be too worried—as long as the company has both content and commerce to offer, Prime will be an attractive choice for Amazon customers.

  • 120
  • 03/17

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