The Oaks Ignore Their Pleas

What’s it Worth? #pricing #amazon #spotify

Posted in General by Jeff Graves on October 22, 2013

Lately, I’ve been thinking a lot about the way services like Spotify and Amazon price their services, because I’ve been contemplating purchases.  Subscription-based services are a great way for firms to establish repeatable revenue streams, which makes them very attractive, especially to innovators and startups, but I think the key is figuring out what to charge.  For example, Spotify charges $4.99 a month for desktop access, but the real value in my mind to their service is mobile access to music, and that’s $9.99 a month.  That works out to about $120 a year, which about the same as a SiriusXM subscription, with the added benefit of being more portable (and giving you more control over the music you listen to).

Oyster’s subscription-based book library also charges $9.99 a month for access to their library of over 100,000 books.  All you need to do is read at least one book a month to make this worthwhile, but Amazon offers access to their “Lending Library” of 300,000 books as part of their Amazon Prime Service which is $79 per year.  Given the other benefits of Amazon Prime (free shipping on most items ordered via Amazon, access to the Amazon Streaming Video service), it would seem that Oyster has a tough road ahead of them.  But look closer at the Amazon deal – the Lending Library is only available on Kindle devices.  That means I’d need to spend at least $70 to buy a Kindle before I can take advantage of that service.  So in Year 1, I’d spend $150 with Amazon for books, versus $120 at Oyster.  If my only consideration here is books, then the question becomes – are Amazon’s 300,000 titles worth $30 a year to me?  Does Amazon provide access to 300,000 books I’d actually want to read, or are Oyster’s 100,000 titles more relevant to me.  I’m having a hard time figuring that out at the moment, based on the information that both companies provide prior to subscription.

Of course, one option would be to take both options – $270 isn’t all that much when you spread it out over a year, and that’s the interesting part from a pricing standpoint.  Each individual subscription (Spotify, Dropbox, Evernote, Amazon, Oyster) is a small incremental cost, but before you know it, it’s adding up to real money.  However, I suppose the way to look at it is what you’d spend on books (or music, or TV shows) separately over the course of a year.  That’s a big mindshift for many people though, and it will be interesting to see how we adapt.

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2 Responses

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  1. Laura said, on October 22, 2013 at 10:42 am

    With the amazon you can only read 1 book a month, so really you’re just getting 12 books a year with that option.

    • Jeff Graves said, on October 23, 2013 at 10:02 am

      That’s a great point, Laura…of course, most months I’m lucky if I get through one book, so that’s not a huge downside for me. But, it does detract from the value of the Amazon solution…really tough to compare apples to apples in that space.

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