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Will ads drive Amazon as much as subscribers?

Assif Shameen
Assif Shameen 5/7/2018 08:00 AM GMT+08  • 11 min read
Will ads drive Amazon as much as subscribers?
SINGAPORE (May 7): In his recent annual “Letter to Shareholders”, Amazon.com CEO Jeff Bezos highlighted the strength of the e-commerce behemoth’s Prime membership base of more than 100 million now, its Amazon Web Service cash cow, the phenome nal su
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SINGAPORE (May 7): In his recent annual “Letter to Shareholders”, Amazon.com CEO Jeff Bezos highlighted the strength of the e-commerce behemoth’s Prime membership base of more than 100 million now, its Amazon Web Service cash cow, the phenome nal success of its Echo home devices powered by virtual assistant Alexa and its sprawling ecosystem. Yet, for some reason, he left out one of the fastest-growing segments of Amazon’s business that has been flying just under the radar: ads.

To be sure, there are two main business models — subscription and advertising, or a variation or hybrid of the two. The internet has helped consolidate advertising into just two large players — Google and Facebook — but it has also helped revive the subscription model. Investors these days put a premium on burgeoning subscriptions because it shows users are willing to put their money where their mouth is.

So, when Amazon first officially disclosed the number of its Prime members last month, investors chased its shares to new heights. Shares in video streaming giant Netflix, which has 125 million subscribers, sell at stratospheric valuations as do those of music streaming pioneer Spotify, which recently reported that its paid subscribers grew to 75 million in March from 71 million in December. The New York Times has survived the print advertising slump by boosting its paid digital subscriber numbers to 3.6 million.

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