Peter Kafka

Recent Posts by Peter Kafka

Where’s Amazon Going With Music, Movies and TV Shows? Ask Media Boss Bill Carr.

bill carr amazon
It’s no secret that Amazon has very big ambitions when it comes to digital media. But the company doesn’t ever say much about them, save for the occasional Jeff Bezos product rollout.

But here’s the guy to ask: Bill Carr, who heads up Amazon’s digital music and digital video groups, which now include Amazon Studios, the unit that is going to make original movies and TV shows for the e-commerce giant.

Carr doesn’t talk much, but last week I got the chance to sit down with him at Amazon’s Seattle headquarters. Amazon is as tight-lipped as Apple when it comes to new product discussions — or lots of other stuff you and I would like hear about — so I didn’t even bother asking him about Amazon’s new TV box. (Still: Count on it.)

But if you read between the lines, you should at least be able to get a sense of what Amazon is thinking as it contemplates beefing up its music offerings, and as it goes head to head with Netflix (and everyone else) in digital video. Here’s an edited version of our chat:

Peter Kafka: A couple years ago, Amazon and Google and Apple were all racing to develop music-locker services. But we don’t hear much about them anymore. How is Amazon’s locker working?

Bill Carr: The fundamental things about cloud music storage that works for all consumers is that it backs up everything, it’s in a safe place. I can access it from all of my devices, it’s simple. I don’t have to think about it. People don’t want to manage their music, they want to enjoy their music. Every consumer likes that.

What may have more limited appeal is how many consumers want to pay $25 a year to do that for all of their music.

Are you surprised about the take-up rates for the $25 a year option?

No. I don’t find that surprising.

cloud musicThe locker services seem like part of a larger trend where big platform companies like you, Apple, Google, are trying to get people to move their media into your own clouds, and end up committing to one ecosystem or another.

It may be that other companies think about it that way, because their goal is that you only use their devices. But that’s not our goal. Our goal is to free you up to use whatever device you want. Which is why we support any kind of PC, any kind of Mac, iOS devices, Android.

Our goal is to be ubiquitous on any device people might want to use. It’s a big investment for us to make all those apps avilable. But our goal is not to lock you into any one ecosystem.

Do you think you can keep doing that? It seems like we’re moving back toward a walled-garden world.

I can’t speak to other people, and what decisions they may make that may prohibit us from enabling our app. But we’ll work very hard on behalf of our customers to make sure our app is available on the devices they use.

You first started selling MP3s in 2007, and for a while it seemed like you weren’t making any headway against iTunes, which dominates the business. But now, at least according to NPD, you have 22 percent of the download market. What changed?

We don’t release any details about where we stand. But what I can say is that we have seen customer growth in our service every year. We have year-over-year growth in sales and in customers. And the way we’ve accomplished that is by building more solutions for customers.

Is your locker service helping sell more music? Are Kindle Fires helping you sell more music?

There’s no doubt that with the trend toward connected devices, mobile devices, our customers are realizing that it is super convenient to buy once and play it anywhere, and make it available on any of their devices. That’s working, and driving more sales.

Now it seems like there’s a move away from music sales and toward access — either from subscription services like Spotify, or free Internet radio like Pandora. You guys don’t offer anything like either one of those, but there are reports you are considering them. Should we expect an Amazon version?

We don’t speculate on what we might do in the future. But we’re also listening to our customers about other ways they’d like to enjoy their music. We’ll always look for the next innovation.

But you’re not philosophically opposed to subscription or ad-supported music?

Not at all. As a company, if we constrained ourselves to certain definitions, then we wouldn’t have gone nearly as far for our customers.

What about the idea of bundling music into Amazon Prime, like you do with video? Right now, there’s no connection between Amazon Prime and music.

We’re always thinking about distinctive experiences — how can we provide something for our customers that’s going to solve important problems for them? We’re always thinking about those things.

amazon videoWhen it comes to video and Prime, it seems like your approach to your subscription service has changed. From the outside, it looked like, initially, you simply wanted to build up a catalog, and you weren’t very picky. More recently, it looks like you’re focusing on specific titles and catalogs.

The part I would disagree with is that we’ve never been thoughtful, or cared about the content. We have reams of data, based on years of being in both the transaction video business and the DVD/Blu-ray business, to know what our customers want to watch. And we’ve used that information to help bring them the right videos.

I think what has changed is — yeah, obviously, we have been increasing our investment over the last two years that we’ve been in this business. And I think it’s fair to say that increasingly you’ll see more and more content on Amazon that’s exclusive.

Why does exclusivity matter?

I think it’s very important for our customers. In some cases, it’s the only way to get some of the best shows. If we want those shows, in many cases the way that business shakes out is you can either have it exclusively, or not have it. More importantly, we are looking at what our customers like, and we want to have a set of movies and TV shows that are only on Amazon.

Why does that matter?

For the same reason that you can only see “30 Rock” on NBC, or “House of Cards” on Netflix, or “Girls” on HBO. It gives users a reason to tune in and try our service.

Are people watching many videos via Prime? Again, from the outside, it seems like there’s not a lot of use. There was a Sandvine study that showed Amazon very far behind Netflix last fall, and people I talk to who sell you programming don’t think you have a a lot of viewers.

We don’t disclose the details. But I would say we’ve seen strong triple-digit growth in terms of rate of use. We’re very pleased.

In the investor letter he published last week, Reed Hastings set up Netflix as a direct competitor with HBO. Do you also think Amazon is competing with them?

HBO’s a wonderful company, and has been a great partner to us. Our customers love HBO programming. I can’t speak to Reed’s strategy. But we’re building … I don’t think there is a another service like ours. It’s not like HBO. There’s at least three, four different ways to get movies and TV shows that you want on Amazon.

Hastings said he’s competing with HBO for customers’ time and money, but also now for content. Are you seeing that conflict coming with Amazon?

My ambition is to make sure that we create something that is its own service, that is not like HBO, Netflix or any other service, with its own unique value proposition. A lot of companies have a competitor focus. We have a customer focus.

Alpha House_Amazon StudiosLike Netflix, you are producing your own original programming. Earlier this month, you put up 14 TV pilots and asked people to vote on them. Why are you getting into originals, and why are you doing it that way?

The primary reason is because we’re committed to the idea of reinvention, and that we think that there’s great value for our customers if we get this right. And the reinvention is, “How do we get a lot more feedback from our customers early in the process? How do we remove gatekeepers from the process, so that great ideas can come from anywhere in the world, and get made into movies and TV shows? And how do we create a collaborative environment, where different creators can work in an open environment, to produce more exciting ideas and exciting stories that customers want to hear?”

So you think there’s video out there that could be made, and should be made, but isn’t, because of the way the existing production process works?

A simple example of that is what we’ve done in books, where we’ve created an open platform for any author to submit their books, through Kindle Direct Publishing. That removes gatekeepers from the process, and opens up all kinds of possibilities for people to become authors. So, why can’t there be great possibilities for people who have great stories to tell, whether it’s a script or screenplay?

It’s a journey for us. We’re flexible on the tactics of how we get there, but firm on the strategy.

If you look at the pilots you put out this month, it seems you’ve used a fairly traditional approach, and are working with lots of established talent. Only one of the 14 pilots — “Those Who Can’t” — came in over the transom. And even in that case, those guys were fairly established. Will that change?

Just the fact that that show came in from an online submission — I would consider that to be remarkable. That possiblity doesn’t exist in the traditional system today. And the idea that we’ve put all 14 pilots out for free, for anyone to watch, with the explicit ask for customers to give us feedback — I think both of those things are remarkable.

Are you surprised by any of the feedback you’re getting on the shows so far?

The point isn’t what I think about it. I didn’t spend a lot of time forming my opinions about it. I have shows that I prefer, but my views don’t represent the views of all of my customers. It really isn’t what I think about the shows, it’s what my customers think.

Do you think the comments you’re getting on the shows will be useful?

I think we’re getting really insightful information on all of the shows. How accurate it is is something we’ll discover over time. Because there has to be a feedback loop, and you have to see what happens in the real world.

This is a multiyear process. If you’re focused on reinvention, it requires you to experiment and collect data. And then try new experiments.

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