Amazon’s three plan strategy for customers

Amazon’s three plan strategy for customers

Amazon is clearly moving into a new era, and they’ve come up with an interesting new plan for customers (or purchasers, for those who prefer alliteration)😉 …or rather, perhaps it is three plans.

They are extending this through the different types of content…and let’s take a look at them.

The three plans are this:

  1. Pay by the item (Piece): these people have Amazon accounts (I’m not counting “no account” as a plan), but make decisions one item at a time. When they want to watch a movie, read a book, or listen to a song, they are willing to pay for it that point
  2. Amazon Prime (at AmazonSmile: benefit a non-profit of your choice by shopping*) members (Prime): they pay (typically) $99 a year, and want to get the most out of it. They certainly may pay for individual items, too, but are generally pretty satisfied with the selection
  3. Premium payers: they may have Prime (Premium), but they will pay more for even more stuff.🙂 They’ll lay out more money for other subscriptions

Let’s take a look at how this works for e-books first:

“Pay by the item” folks just buy e-books when they want them. They aren’t Prime members at all…if they pay $0.99 for a book or $9.99, that’s what they pay.

The Amazon Prime members, which Amazon just started really serving with Prime Reading

Frequently Asked Kindle Questions: Prime Reading edition

have access to a rotating set of about 1,000 titles.

For people who will pay more for the most options, they subscribe to

Kindle Unlimited (at AmazonSmile: benefit a non-profit of your choice by shopping*)

perhaps on top of Prime (which is what we do). That gives them close to one and a half million titles.

Amazon also just introduced

Amazon Music Unlimited (at AmazonSmile)

which sets up a similar system for music.

Some people will buy music as they want it.

Others will be Prime members, and will be satisfied with Prime music, which has about 2 million titles (although rumor has it that some songs have moved from Prime Music to the Premium Amazon Music…causing some previously created playlists to have gaps).

Amazon Music Unlimited has “tens of millions” of songs…and you can download music. There are more than 41 million digital songs at Amazon, so this may not be all of them (that will depend in part on the deals they strike with rightsholders), but it will be most of them.

Prime members can pay an additional $7.99 a month (or $79 for the year), non-Prime members by $9.99 (and they don’t show a discounted annual option), and Echo owners can get it at $3.99 a month (for a single Echo device…$14.99 or $149 a month, in the upcoming Family plan).

What about games?

Yet another recent addition for Prime members (see the pattern?)😉 is Twitch Prime. People can buy games one at a time, take what comes with Prime, or subscribe ($4.99 a month, with other options).

With video, you get pay by the piece, Prime, or pay for additional content through Streaming Partners subscriptions:

Amazon unplugs cable…and recent e-book price drops

It’s an interesting strategy, and I can see it being successful.

For us, we were Piece buyers for a long time. I was, I would say, relatively slow to subscribe to Prime. At the time, the one big advantage was free shipping in two days on many items, and I would do the calculations and think it wasn’t worth it. I was underestimating the convenience factor, and then Prime added all of these other perks!

When Kindle Unlimited was released, we went for it…and have been happy with that. What was available for Prime members then, the KOLL (Kindle Owners’ Lending Library) was just so limited (one book a calendar month), that after a while, I didn’t even pay attention to it. We went from Piece to Premium…but there wasn’t much of a Prime choice. Now that there is, we are staying with Premium (keeping our KU subscription), because, well, I read weird books.😉 Those tend to be in KU, but not in Prime Reading.

I like music, but feel adequately served by Prime Music. At this point, I don’t see becoming a Premium music family…and we don’t play videogames much (my Significant Other plays Candy/Soda Crush and Scrabble, but I think that’s about it). We’ve been Prime music consumers, and now, even though we’ll probably never use, we are Prime videogame consumers

Let me just ask this for e-books…which one of the types of purchasers are you/the people on your account?

What do you think? What makes your decision (if anything) to pay for a premium subscription? Do you like the recent additions to Prime? Feel free to let me and my readers know by commenting on this post.

Note: this post was updated when the short names for the three plans occurred to me, and to add more content and the poll to it.

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* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) By the way, it’s been interesting lately to see Amazon remind me to “start at AmazonSmile” if I check a link on the original Amazon site. I do buy from AmazonSmile, but I have a lot of stored links I use to check for things.

4 Responses to “Amazon’s three plan strategy for customers”

  1. rogerknights Says:

    One way for Amazon to nudge Piece buyers toward Prime would be for it to increase the actual Piece Standard Shipping delivery times when using the Free Shipping option (over $50). Supposedly, the delivery time is 5 to 8 days, but actually delivery has been about as fast (in my experience) as one of the faster options. Amazon could easily drag its feet here.

    • Bufo Calvin Says:

      Thanks for writing, rogerknights!

      The concern there would be that piece buyers are less invested in Amazon, and might simply switch to another option. It’s a bit of a delicate balance: yes, you want to encourage piece buyers to become Prime, but you don’t want to do it in a way that you simply lose them. Competitors have been getting better, which makes it tougher.

  2. Tom Semple Says:

    I think it is difficult to infer that Amazon Music is ‘cannibalizing’ Prime Music. I have seen many cases where something I ‘added’ to my library has later become unavailable via Prime Music. Same is true with Prime Video, Kindle Unlimited, Netflix, and any other subscription service. One cannot assume that just because it is there today, that it will be there tomorrow, though obviously the ‘attrition’ needs to be at a fairly low level to avoid customer dissatisfaction.

    I subscribe to KU, but at the reduced annual rates offered on Prime Day. I am sort of on the fence as to whether I will stick with it next year. In general, however, I prefer subscription services to pay-as-you-go, provided there is a critical mass of content that comes along with that. KU, given lack of participation by major publishers, is therefor short of ideal, but I’m not sure Scribd qualifies either as they don’t seem to have anything approaching ‘everything’. I think the only way for more participation would be if print sales start collapsing, while digital maintains or grows. I can see that happening but it might take 5 to 10 years.

    Video subscriptions are rather balkanized and there is no ‘everything’ source. It seems no one service is quite enough, yet having several involves linear increase in monthly fees, and diminishing returns as there is no way to ‘get money’s worth’ because viewing time is limited. No change in sight.

    Music subscriptions seem the most advanced in terms of having ‘everything’, and have additional advantage that consumption does not always require full attention, and can be mixed in with other activity. And the services are more or less equal in terms of content and pricing.

    After trying Spotify free tier for several months, I was ready to go Premium and stop buying music on as-you-go basis. The apps are excellent, and with Premium, have great integration with Echo/Fire TV (Amazon Music apps have no such integration at present). I don’t think I can go back to ‘free’, I underestimated how disruptive ads are to enjoying music, and how slick the integration with Echo is. There are some gaps in content due to regional restrictions, but these are relatively minor. If Amazon improves their music apps, I might consider switching to Amazon Music at some point in the future and saving a couple of bucks.

  3. Man in the Middle Says:

    We got Kindle Unlimited because my wife likes to read a LOT of books that neither of us cares to have cluttering up our permanent Kindle library. KU allows her to read long series at no added cost, and without making it harder for either of us to again locate books in our Kindle library that we really do still care about and will likely read again.

    Now that we have KU, it turns out I’m the same, except in a different genre, again reading at no added cost every book in long series that are good enough to enjoy, but not good enough to go in our permanent library.

    I WILL be renewed for KU again next Prime Day because I’ve already prepaid for that renewal. The Amazon rep last Prime Day assured me that because we still had a year to go on our existing KU subscription, our renewal would not be visible until our current subscription runs out, and then suddenly appear, showing us renewed for another two years.

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