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Amazon takes on Spotify with streaming music services that cost less than $10 a month

$8 a month for Amazon Prime members, $4 a month for an Echo-only version.

Apple has one. Google has one. Spotify has had one for years.

Now Amazon has a music subscription service, too.

Like everyone else, Amazon has started selling a $10 monthly service that lets you listen to whatever you want, whenever you want, on any device you want, without ads.

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But Amazon is also offering two versions of the service that its rivals don't: An $8-a-month version of the service for its Amazon Prime subscribers, and a $4-a-month version of the service that will only work on Amazon's line of Echo speakers. (That's the one we told you about in August. You're welcome!)

Amazon's entry into the subscription music business would be noteworthy on its own, since Amazon is a giant tech company with big money and ambitions. But the fact that it has broken the $10-a-month barrier for on-demand, ad-free music is the real news here.

Digital music services, most recently Apple, have tried pushing the retail price for on-demand music below $10 a month for years, without success.

Amazon has done it with a combination of brute force and creative thinking. It got the labels to agree to the $4 service that only works on Amazon devices, by telling the labels that it would act as a gateway to more expensive services.

And it appears to have launched the $8 service simply by paying up: As far as the music labels are concerned, Amazon owes them as much for each subscriber on the $8 service as it does for $10 subscribers. That is: Amazon is subsidizing the difference.

Jeff Bezos, chief executive officer of Amazon.com Inc. and founder of Blue Origin LLC.
Matthew Staver | Bloomberg | Getty Images
Jeff Bezos, chief executive officer of Amazon.com Inc. and founder of Blue Origin LLC.

So now we'll have a real-world test of a theory some digital music executives have argued for years: If you lower the price for on-demand music subscriptions, you'll sell many more subscriptions, and the music industry will grow overall. Time to find out.

Meanwhile, if you've played with Spotify, or Apple Music, or any other $10-a-month subscription service, then you'll know what to expect from Amazon Music Unlimited: It has a catalog of about 30 million songs, and you can call them up on any device, including your phone, anytime you want. You can also download them, so you can play them when you're not connected to the internet.

But Amazon thinks there are lots of people, including a big swath of its customer base, who have yet to sign up for Spotify, or any other service. It's most interested in that group.

This is the same line of thinking that has allowed Apple to sign up 17 million Apple Music subscribers in the last year, so there may be some merit to that.

The other distinction that Amazon is playing up is its music service's integration with Alexa, its voice-activated AI assistant that powers the Echo.

You can still operate Amazon Music Unlimited via Amazon's desktop and mobile interfaces, but Amazon is really hoping that you'll spend a lot of time asking Alexa to play something for you. Maybe a specific song, or a playlist based on mood, or a style of music.

It strikes me that, as smart as Alexa is, someone who spends a lot of time making playlists or hunting for obscure music will be frustrated by Alexa's limited command set. But then again, odds are very high that kind of person already has a subscription music service.

Two other notes:

  • Unlike Apple Music and Tidal, Amazon isn't launching by promoting special access to megastars like Taylor Swift or Beyonce. Instead it has the same basic catalog that every other service has. But Steve Boom, who runs music for Amazon, says the company isn't opposed to the idea of exclusives.
  • Amazon Prime used to create all of its media services as value-adds for Amazon Prime: You paid $100 a year for fast, free shipping, and you also got goodies like free videos. But lately it has begun offering add-ons to Prime. Last year, it started selling subscriptions to services like Hulu and Showtime as add-ons to its video service, and now it is selling a monthly music service.

By Peter Kafka, Recode.net.

CNBC's parent NBCUniversal is an investor in Recode's parent Vox, and the companies have a content-sharing arrangement. Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu.