Smart SpendingSmart Spending

Does streaming make Amazon Prime worth $99?

The expanded offerings help make the service attractive, even after a $20 price hike earlier this year.

By MSN Money producer Jun 13, 2014 2:13PM

The Amazon Prime logo (c) Richard Levine/Demotix/Corbis
By Catey Hill, MarketWatch MarketWatch


Amazon announced Thursday that it is launching an ad-free streaming music service called Prime Music that will give Amazon Prime members free access to more than one million songs, including acts like Beyonce, Pink, Bruno Mars, Blake Shelton, Madonna, Bruce Springsteen, The Lumineers and Justin Timberlake.

 

Prime members will also get free access to hundreds of pre-set playlists, which include about 20-25 tracks, based on artist, music genre and mood (think: Hip-Hop for Your Commute, Playdate with Toddlers and The Heaviest Metal) or they can create their own playlists.

 

This news follows Amazon's announcement in March that it would raise the price, which has been set at $79 since the service began in 2005, to $99 per year. Now, for roughly a C-note, Prime members get: two-day free shipping, free access to 500,000 Kindle titles, streaming movies and TV shows and access to a million songs.


This array of services -- including the recent music addition -- is a way for Amazon to retain Prime users amidst the price hike, says James Crompton, an analyst with IBISWorld. Indeed, Prime users tend to spend more than other users: According to Consumer Intelligence Research Partners, Prime members spend an average of $1,340 per year on the site, while overall consumers spend just $968 -- so it makes sense that Amazon wants to keep Prime members happy.

 

But does the addition of music make the $99 price tag worth it? If you're a music buff, it may not make a ton of difference to you because you'll probably want more music than the one million songs Amazon is offering for free. Competitor Spotify, for example, offers a free service with commercials or a no-commercial service for less than $10 per month -- and it has more than 20 million songs. And even if you're not a music fanatic, it still costs $99 to get Prime, so you have to evaluate use of all the other perks it offers.

Crompton says the real value in Prime, for many people, is likely still in the shipping. For those who do a lot of shopping on Amazon -- and want fast shipping -- it's likely worth it; for those who are more occasional buyers, it may not be.


Here's a quick example to help you figure out what it means: Let's say you want two-day shipping on apparel. That will likely cost you $7.99 per shipment plus $1.99 per individual item for two-day shipping, which means that you might be better off forgoing the membership unless you planned to get many more shipments (with one item each in them) in the $35-and-under range. The math is even worse for video games and accessories, which typically cost $5.99 per shipment. Here is a list of all the Amazon shipping costs. In other words, unless you're getting multiple two-day shipments from Amazon each year, you might want to pay for shipping ala carte.

 

If you don't care about speed, Amazon Prime also might not make sense for you. Consumers without a Prime membership can sometimes get free shipping if they spend $35 (excluding gift wrap and taxes) or more on eligible products, though that's typically not two-day shipping. Plus, shipping rates on individual items on Amazon are often quite reasonable. Books, for example, cost $3 per shipment plus an additional $0.99 for each individual book for standard shipping (so a shipment with one book in it would cost $3.99) and $10.99 per shipment plus $1.99 for each individual book for two-day shipping.

 

Of course, if a Prime membership would allow you to cancel your Netflix or Hulu Plus (since Amazon Prime members get free streaming TV and movies) where prices range from $6.99 to $19.99 per month; Spotify or other streaming music library (since Prime members now get one million free songs), where prices hover around $4 to $10 per month; and/or allow you to buy fewer books (since Prime members get 500,000 free titles, it might be worth it, saving you $100 or more dollars in a year when combined with all the free shipping. But here's the thing: Sometimes, users -- especially music, book, TV or movie buffs -- find that the Amazon movie/TV/music/book libraries aren't as great as other options, so they end up shelling money out anyway.

 

Bottom line: If you buy a lot of items that are under $35 -- or want two-day shipping on multiple items -- the Amazon Prime membership, even at $99, is probably still a good deal. And if it allows you to ditch your streaming TV/movie or music service, even better.


More from MarketWatch



79Comments
Jun 13, 2014 4:22PM
avatar
Amazon Prime is a deal especially if you buy the Amazon Fire tv streaming device for $99. You get over 100,000 choices of shows and movies to watch and the music to stream. If you shop online like we do many times you will find the item plus shipping negates any savings you may get not buying from a store. Free shipping allows us to buy many things either in bulk or at half the price one would pay at a store. I got the Fire TV and Prime membership and have all ready saved over $100 on shipping and watched many shows and movies I missed on TV. An Amazon Fire streaming TV device with a Prime membership costs $200. One month of cable or satellite TV will cost you that much depending on your TV package maybe 2 months. Throw in the free shipping and it's quite a deal for us and being able to borrow 1 best seller book from the Kindle library every month for free. Get all this for $200 an internet connection and you will never waste your money on able or satellite TV again.
Jun 13, 2014 11:05PM
avatar
I've watched at least 800 shows and movies for "free" through Amazon Prime. (Quotations because I pay for the service so not really free but you get my drift.) At minumin I would have had to pay between $0.99-$5.99 per show to rent it with the medium price being about $2. That means that my prime membership has paid for itself in streaming alone for about 16 years. And that doesn't include the free shipping.
Jun 16, 2014 9:44AM
avatar
For those of you who use Prime mainly for shipping, like me, there is a new world at Amazon regarding shipping. I was willing to pay the increase in membership, however, there is more to it than that.  2 day Prime shipping is no longer as good as it was it's now more like 3 day shipping . The last order I placed which was DIRECTLY from an Amazon Fulfillment Center and it took 3 days.  I had placed the same order for coffee once a month for over a year and ALWAYS received them in 2 days because they were shipped via UPS. This last order was shipped via Fedex Smartpost.  Fedex delivers the shipment to your local post office and they make the final delivery which automatically adds another day.  ANYTIME the USPS is involved there is trouble ahead. So, Amazon raises the membership amount, then uses cut rate carriers yet they tout 2 day shipping which is not true anymore. Prime customers are getting screwed in shipping anyway.
Jun 16, 2014 11:38AM
avatar
Amazon has lost its appeal. Prices have inched up to retail store prices, now you have to pay sales tax, returns are time consuming. I dropped my prime and am now ordering far less than I used to. 3rdarty vendor are cheaper than Amazon even with Prime. Careful Amazon, you are killing the Golden Goose.  
Jun 16, 2014 9:48AM
avatar
I have noticed that very often the items that are prime eligible are more expensive.  So sure you save on the shipping, but you are paying more for the item.  Also there are many things that just don't have a prime option.  I also have not found a whole lot on there that I want to watch, and my roku won't play the music.    My membership is up in September, so I don't know yet. 
Jun 13, 2014 10:13PM
avatar
I'll drop it for awhile to see if I miss it then decide from there.
Jun 16, 2014 8:46AM
avatar
Why is this even an issue??  @ $99 you get an array of items such as free shipping, movie, and now, music streaming, and free book downloads.  If you use any of these items a few times a year, it is worth it, If you don't then it's not.-- Plain and simple.  The $99 fee should not be a deal breaker in any case.  Its for a whole year-- relative to many things in life, it is inexpensive-- for example,  I just paid $37 to have a tire puncture on my auto repaired-- and I took the tire off!   So let's all worry about the more important things in our lives than a no brainer like this!!
Jun 16, 2014 9:39AM
avatar

I think it does...

I've been a Prime member for over 8 years now and I think $99.00 is still worth it. As most know it has been $79.00 for many years. The advantages and things you get for it make it a great deal. The prices are good...even better that competitive, the video choices are voluminous, 2 day shipping for free and a great return policy. If you live in remote or somewhat remote areas like me...The nearest stores are over 45 miles from where I live... having it delivered in 2 days is wonderful especially during winter time and other bad weather times. The savings on gas alone not to mention the time factor gives even more added value. About the only things I don't buy from Amazon are perishables.

AMAZON PRIME IS A GREAT DEAL... Its a product and service that everyone should take advantage of.


Jun 16, 2014 10:40AM
avatar
Been an Amazon prime member for years because of textbooks I purchase for school.  I used to be a prime member for the saving on shipping for the holidays as well.  I am almost out of school and will be rethinking the membership.  The student rate for prime is a good deal....99 bucks, count me out. 

I tried their music this weekend and it is very lacking.  Don't expect new music, don't expect top shelf albums either.  What I got when searching were live versions, instrumentals ect. As for movies, I think in two years my family has probably watched 3 or 4.  Again, don't expect anything new or top shelf.  I get a better selection through netflix for 8 bucks a month.  Amazon can keep offering all these so called free things, but if they don't add value, they don't matter.

As someone else mentioned, shipping has gone downhill.  What once was 2 day, is now 3 and 4 day shipping.  I got DHL who left a printer on my doorstep in the original box and ran.  I was home at the time thankfully.  At least UPS rings the bell for something like that.  The last time I ordered text books, the shipping company showed up an a plain van at 9pm.  Who does that? 



Jun 16, 2014 2:06PM
avatar
We bought Prime several days ago and were bitterly disappointed with it. We wanted it for watching TV shows and movies. Turns out we found only 3 shows we could watch for free after some searching. The rest you have to buy or rent per episode. Not good enough with a $99 membership.
Jun 16, 2014 8:14AM
avatar

I don't watch shows in prime much. It doesnt really have much different than Netflix or Hulu. It would be nice if I could watch all the movies listed instead of only the prime movies.

 

I think I have gotten my money out of the shipping though. Before prime, I would select free 5-day shipping and would still if I didn't have prime. The two-day shipping is very nice though. A few times I have received my package next-day. A couple times I ordered in the afternoon and had the package waiting on me when I got home from work the next day. In that instance it was faster through amazon than if I had gone to a store to buy it myself.

 

I'm still on my first year and I got prime before they upped the price. I don't see myself ordering as much this year so I'll probably let it expire and see if I miss it.

Jun 16, 2014 12:51PM
avatar
I chose the "Amazon Mom" option that is basically Prime plus you get 20% off subscribe and save baby items.  Diapers cost $35 a case, with 20% off I save $7 a month which is $84 a year.  That makes the $99 worth it.  Diapers from Amazon are even cheaper than most store prices, even with sales and coupons.  I do stream TV shows and movies, but I wouldn't pay $99 a year for that or the free 2-day shipping - I can wait for 5 days.  My biggest complaint is that the "free" Kindle titles only work for the Kindle - I use the Kindle app on my iPad and can't get the free titles since it isn't an actual Kindle.  Overall they have great customer service and for some items (not everything) they have really good pricing.
Jun 16, 2014 12:12PM
avatar

Let's see, 289 orders from Amazon over the last 12 months. 40% of them below $30 each .... Still works if you ship to a dozen different destinations.

 

You save money when you don't feel like you *have* to load up to the $40 level for free shipping.

 

The article also seems to have left out the fact that you can share the free shipping part of Prime with 5 (extended) family members.

Jun 16, 2014 11:32AM
avatar
2-day free shipping, LOL....

More like 3-5 days.  That's how long the packages were taking to get to me, until I complained.  They gave me an extra month of Prime for free.  The packages started coming in 1-2 days after that.  I was going to start praising Amazon about the shipping being excellent again.  Now, the packages are starting to come within 3-5 days again.  PRIME is such BS.  Prime Instant Video selection is spotty at best.  You'll only get  the same 1, or 2, seasons of a show on Prime, for Months on end.  I think my kids can recite the first season of Dora off by heart.

Jun 16, 2014 4:15PM
avatar
I use Amazon prime as my first shopping choice.  I'm tired of driving all over town, finding a place to park, find the product, deal with sullen employees, and walk a few miles inside the store, only to be checked out by an unsmiling slack jawed high school dropout. Love shopping in my pajamas and waiting for delivery.  I don't use the "pantry" though. Tried that and found that a trip to Dollar General is cheaper, and easy to find.  And I have to say, the one in my town employs friendly folks, and that goes along way with me.
Jun 16, 2014 9:56AM
avatar
I had considered it, but ended up going back to netflix. I like to read and wanted to be able to get more than 1 free book a month. With the difference in price, I can buy a few cheap books per month if I want.
Jun 16, 2014 11:33AM
avatar
I've had Amazon Prime for over a year and love(d) it.   Now Amazon has instituted Amazon Prime Pantry and wants to charge you a huge fee for delivering your items in one box.  Really?!!  The thing of it is, if you're a Prime member you don't seem to have a choice if you want a 'box' or not.   So it seems like on top of the Prime Membership fee now you have to pay extra for this whether you want it or not!  Looks like I'll be cancelling my Prime at the end of my membership.
Jun 16, 2014 9:25AM
avatar

I am contemplating this service, but my main question is can you watch shows from HBO, Starz, Showtime, etc? If not, it's not worth it, as these are the only networks that have shows that are worth watching. Other channels do not interest me. I do like Amazon, and if i can watch programs from the channels I mentioned, then this might be a great deal and a way to get rid of expensive FIOS.

Jun 16, 2014 11:43AM
avatar

IT'S NOT WORTH IT!!!  First they don't have enough FREE streaming stuff included with the prime membership, most of it is 1.99 per episode of tv series and 3.99 up for movies.  The 10% shipping discount would probably be worth it IF YOU SHOPPED THERE ALOT.  In order to break even on 99.00 fee you'd have to spend $990.00.  Amazon is turning out to be just like all the other greedy stupid large companies.  Don't they realize that 3 fast nickles beat one slow dime, every time!!

What do they teach in college these days? 

Jun 16, 2014 8:45AM
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

ABOUT SMART SPENDING

Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.

VIDEO ON MSN MONEY

TOOLS

More