Amazon Music Unlimited (AMU) is billed on the company website as ad-free. This includes the special $3.99 per month plan designed for Echo users. Then why is AMU serving audio ads? Earlier today, I asked Alexa for Christmas music on my personal Echo. It started what Alexa called a classic Christmas music channel. Within about 20 minutes I was surprised to hear a Capital One ad because I had previously enabled the AMU service for Echo. I was not timing the ad, but I have personally listened to several thousand audio ads as part of previous research and I estimated it as a 15-second spot. A short time later I heard two more ads back-to-back in a stopset which I believe were a 30-second followed by a 15-second spot.
Three Ads in About 30 Minutes, Including a Local Ad
I was surprised to hear any ads given that Amazon Music Unlimited is marketed as an ad-free service. A screen shot of Amazon’s website this evening confirmed the ad-free positioning for all AMU services including the Echo plan.
However, I was even more surprised when I heard two local advertisements. One was for a credit union that exclusively serves Northern Virginia. The other included the address of a restaurant in my zip code. The advertisers and the estimated ad length for each included:
- Capital One – National Ad – 15 seconds
- Apple Federal Credit Union – Local Ad – 30 seconds
- Eggspectations – Local Ad – 15 seconds
Amazon Has Audio Ad Serving Capabilities and Local Targeting
The local advertising targeting is not something that Amazon promotes today on its website for advertising solutions; nor does there appear to be any mention audio advertising. A review of five case studies on the Amazon Media Group’s website only revealed visual display and video ads. However, today’s experience confirms that Amazon can deliver locally targeted audio ads as well.
The other interesting aspect of this ad campaign is that all three ad were for services — two in financial services and one restaurant. Amazon has long had advertising options for sellers on its platforms to promote products and there are even some options for service providers. However, neither financial services nor restaurants show up as a current category. This could mean that Amazon is running a special program to test different advertising solutions for its media properties or that it is using an ad network to fill ad inventory.
Is Ad-Supported Music on the Menu?
Many U.S.-based users are familiar with ad-supported services from Pandora, Spotify, Slacker and others. Without going into the different music licensing models they each employ, Spotify and Slacker both provide on-demand music on a subscription basis similar to Amazon Music Unlimited. Like Pandora, Spotify and Slacker also provide ad-supported music streaming that is not on-demand, meaning you can’t pick the specific song but can listen to a category by artist, genre or pre-set channels. It appears that Amazon has this same capability and may have licensing permission, but is not yet offering an ad-supported option that listeners can access for free.
A final consideration worth noting is that one minute of ad load time over 30 minutes is a bit lower than the other ad-supported music services according to the XAPPmedia 2015 Ad Load Report. The most recent average was 2 minutes 29 seconds (2:29) per hour or about 1 minute 15 seconds per 30 minutes. With that said, it is within the range of audio publishers with XAPPmedia reporting lower and upper median ranges of 1:39 and 2:59 seconds per hour.
Amazon’s Media Monetization Strategy
As a consumer, I am concerned that a service advertised as ad-free is serving ads. However, as an industry analyst, I am intrigued that Amazon now has proven capabilities in audio advertising that includes local targeting.
Amazon’s assets in streaming video and now streaming audio could begin to generate revenue based on either subscription or ad-supported revenue models. Amazon Music Unlimited has a full subscription service that is probably dictated by requirements of the music rights license holders. You can imagine this group of music labels agreeing to permit an ad-supported service only after subscription services had an exclusive window for sale.
Similarly, you can imagine that Amazon Prime Video which is now free to all Prime Members could eventually bifurcate into an ad-supported and subscription-based service. In fact, there was a small eruption in a Subreddit two months ago about the introduction of non-skippable ads for Prime Video. Looks like advertising is going to be part of the Amazon revenue mix going forward.
Editors Note: I have reached out to Amazon’s media department for a comment on these developments. I will update this column or provide a link to a new column if I receive a reply.