The Amazon Effect   //   March 24, 2021

Why Amazon Music is making a merch push

Amazon is integrating merchandise more deeply into Amazon Music, the company’s music streaming app — the latest example of Amazon tying consumer products into its larger media umbrella.

Fans can now buy merch from artists directly within the Amazon Music app. When someone visits an artist page on Amazon Music, an option to buy their products will pop up alongside their music videos and livestreams. Amazon is debuting the new feature with product lines from Billie Eilish, Gucci Mane and others. It is also selling exclusive-to-Amazon items from a handful of other musicians. Almost all of the merchandise on Amazon Music is available through Amazon Prime.

Amazon isn’t the only company to tie merch with music streaming. Spotify artists can add products to their artist profiles. The difference is that clicking to purchase those items on Spotify sends customers to a third-party company called Merchbar. That requires slightly more friction than buying from Amazon Music, which lets people make a purchase on the same panel as they are streaming.

Until now, Amazon Music has remained distinct from the company’s larger e-commerce business, but this recent development suggests that these two sides of the platform may become more tightly integrated down the line. It also shows the way in which Amazon, as its empire expands, is tying consumer products more deeply into its ecosystem.

“Amazon already has the infrastructure in place to handle the production and fulfillment of artist merch,” Ali Samadpour, founder of the music marketing firm Prescient Digital, said in an email to Modern Retail. “It’s a natural progression for them.”

According to Samadpour, the ease of sale of merchandise on Amazon Music could help some artists move more products, but he said that those sales were unlikely to drive big enough revenue numbers to matter to a behemoth like Amazon. Instead, he said, the biggest draw for Amazon may be the existence of exclusive products — which adds another reason to subscribe to Amazon Music. Although Spotify and YouTube each partner with Merchbar, “they don’t have the exclusive merch deals that Amazon now has,” Samadpour said.  

In terms of size, Amazon Music remains a third-place competitor to Apple Music and Spotify, but it isn’t as distant of a third as it once was. According to research published by Counterpoint last year, Amazon Music claimed 12% of all streaming revenue — still below Apple (25%) and Spotify (30%), but above both YouTube Music (9%) and Pandora (5%). In the last few months, as Amazon Music continues to surge, the company has continued to integrate other aspects of its business with it: in September, for instance, Amazon added livestreams from Amazon-owned Twitch into the Amazon Music app, so that artists can do live performances or streams with fans. At the same time, Amazon Music also added podcasts to its platform, a move that culminated with the acquisition of podcast maker Wondery at the end of last year.

Amazon Music first launched in 2007 as a MP3 store in the vein of iTunes, but it didn’t add in a streaming service until 2016 — far later than most of its competitors. Still, Amazon’s dominance in the audio space, especially thanks to the growing popularity of Alexa devices, has helped it make up for lost time. Amazon Music has remained the fastest-growing of the major streaming services since 2019.

For Amazon, adding merch to Amazon Music might be a sign of much more to come in the streaming space. This week, Amazon landed exclusive rights to stream the NFL’s Thursday Night Football on Prime Video. As some television experts previously told Modern Retail, it isn’t difficult to imagine that Amazon might soon start selling sports memorabilia directly on its platform.

Meanwhile, from the music industry perspective, Amazon Music’s product expansion seems well timed. During lockdown, music streaming has led to a merch boom, and Eddy Richman, CEO of the independent artist promoter WMR Music Group, told Modern Retail that merch “is especially crucial at this current moment where tours and live shows are on hold.” Whereas people used to buy a large share of artist products at concerts and events, now streaming — plus online events — are powering those purchases. According to the Wall Street Journal, when the singers Brandy and Monica competed in a high-profile Verzuz battle, the duo — through the platform NTWRK — managed to sell $230,000 of “Brandy vs. Monica” hoodies. It’s difficult to say exactly what percent merchandise sales now comprises of overall music revenues, but in 2019, the last year figures were reported, tie-in products brought in $3.66 billion for the music business, according to a survey from Licensing International (the industry group IFPI estimated that global music industry revenue going to labels and artists hit $20.2 billion that same year).

Yet, according to Samadpour, “there has been no real central hub for artist merch.” Until now, he said, most artists sold only through Shopify stores on their own sites. If Amazon’s latest effort is any indication, “Amazon is creating a marketplace to shop exclusive merch” from artists, he said. Potentially, Amazon could mold itself into a destination for merchandise — and, of course, drive more downloads of Amazon Music overall.