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Amazon Planning Free Streaming Media

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    NEWSLETTERS

    Amazon.com is taking another step towards becoming a multimedia giant by creating a free streaming television and music service, according to reports.

    The free service differs from its original strategy of offering streaming video to $99-a-year Prime service customers, the Wall Street Journal reported.

    The ad-supported free service, which could launch in the next few months, will feature original programming as well as licensed programming.

    The Journal reported that Amazon is in talks with the creator of its original series, "Betas," about a tech startup, which has been canceled on Prime but may reappear on the free service. Users may also see free music videos, such as those seen on YouTube.

    Last year Amazon spent $1 billion to "acquire content and produce original programming," according to the WSJ. But with an ad-supported streaming video service, Amazon can sell ads and generate $1 billion -- kind of a better business model. (However, YouTube took home about $5.6 billion in ads, so there's definitely room for improvement.) 
    The free service would also give Amazon more access to user preferences and information for targeted ads, which tends to cost marketers more.
    Perhaps the real reason for the free service may be to get users to pay for Prime, or at the very least to buy more stuff from Amazon. The e-commerce giant is rumored to release a new streaming-video device to compete with set-top boxes and Google's dongle, so the free service is coming at a very opportune time.
    If the service gets off the ground, there's no guarantee the ad-supported service will continue to be free. In fact, the unnamed sources told the WSJ that the price could increase if the numbers don't work out for Amazon.
    Either way, it's a nice publicity stunt even if it's a short-lived one.