The leading online shopping company Amazon’s advertising business reached from a small remark in its earnings report to more than USD 10 million business in nearly no time flat. The company raised this segment rapidly by picking many low-hanging fruits: advertisements and sponsored displaying on its product search result screens.
In building out its advertisement business, the company introduced a number of small schemes, hoping some would improve revenue for the company. It obtains Twitch around 5 years ago and it currently refocused on the streaming advertising site. It launched IMDb Freedive at the start of this year, and it is already growing into the more ad-supported video.
According to the report, this week, Amazon plans to launch an ad-supported music streaming service. The company has not confirmed about the service coming or that it would extend its ad-supported video service efforts.
The company’s digital media efforts have been successful so far. Amazon Music Unlimited and Prime Video have attracted significant audiences and a robust revenue stream on the company’s hardware such as the Echo smart speakers and Fire TV.
Using what it got inspiration from such premium services and their advertising business can help the company to compete against companies like Alphabet’s (NASDAQ: GOOGL), Spotify (NYSE: SPOT), and Roku (NASDAQ: ROKU) YouTube in the ad-supported digital media platform.
In highlighting how the ad-supported music streaming service will work. The report states that Amazon would spend record labels each stream, irrespective of how many advertise it sells. That differs from Spotify’s deals with the record labels that offer s revenue. As well as a confirmation of at least a fixed minimum payment. However, YouTube also offers a high revenue share for its music video service.
Amazon may take a comparable approach along with the streaming video, where the company pays up the front of original content. But then it is able to keep nearly 100% of the advertising revenue generated in contrast to that content.
Currently, Amazon is in a stand to offer payments for original content thankful to immense cloud computing. And retail businesses that generate billions in cash each year.
It is a small hazard as compared to the size of Amazon’s other processes. But the opportunity is enormous. Roku’s management states ad-supported streaming video is rising faster than the premium video.
The company stands to distinguish itself as other companies unveiling subscription services later this year. Currently, Spotify has more than 116 million ad-supported viewers on its platform, it is still growing around 24% per year.