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Amazon Ups Streaming Prices – Kinda

28 Oct, 2013 By: Stephanie Prange

Amazon’s streaming service has done something that just a year or so ago put Netflix into a downward stock spiral, with pundits placing CEO Reed Hastings on worst-CEO lists.

Amazon has raised prices ­— kinda. The service raised the threshold for free shipping from a $25 order to $35. And that may mean that customers pay more for the privilege of streaming. Let me explain.

Amazon’s streaming service has always operated below the radar, a formidable second-run in the streaming business. Amazon Prime subscribers who pay $79 for their service — which offers free shipping — can access Amazon’s Netflix-like streaming service at no extra cost.

“Free” is a misnomer. Folks pay what I would term a subscription cost ($79) for no-cost shipping and Amazon Prime streaming (a competitor to Netflix).

Amazon’s latest move involves more than just shipping. It’s designed to push consumers to Prime membership.

An Amazon release noted: “Prime includes unlimited, free two-day shipping, with no minimum order size, on more than 15 million items, as well as unlimited streaming of over 41,000 movies and TV episodes through Prime Instant Video.”

There you have it. Amazon Prime is a package that includes streaming. You aren’t just paying for free shipping; you are paying for a streaming service.

But, if you don’t subscribe to Amazon Prime and ship anything less than $35 (as opposed to the previous $25), you find out Amazon’s shipping prices have risen. And you are likely to choose to pay the $79 for Amazon Prime, resulting in more revenue for Amazon (and its streaming service).

It’s the classic upsale: “Would you like streaming with that free shipping?”

I also wanted to call attention to a special section in this week’s issue on Apps. Apps are an increasingly important part of our business, and we will be covering the market on a regular basis. Previously, we ran special sections on apps, but more regular coverage is warranted. Please contact reporter Chris Tribbey (ctribbey@questex.com) with story suggestions.

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About the Author: Stephanie Prange

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