Amazon announced this week that Amazon Prime would be seeing a price increase for the first time since its launch 9 years ago, from $79 to $99.
If the rising cost of shipping, and improved abilities to deliver next-day or even day-of are at the heart of that price increase, then it seems completely fair and customers will understand. But the question on the table is: how much is expenses related to Amazon Prime's core value proposition affecting the price increase, or instead is it the side ventures that Amazon is bundling in as "value-ad": Amazon Prime Instant Video and Kindle Owners' Lending Library.
In particular, Prime Instant Video, Amazon's Netflix and Hulu+ competitor, must be a significant cost for Amazon to continue to building out. Licensing content, especially platform exclusives, is an increasingly costly venture as bidding wars for the best content heat up. Additionally, Amazon is investing in Original Series of its own that it provides for free to Prime customers, which ads to the ledger.
Prime Instant Video, Lending Library and Original Series are all great value-ads, but I don't know many people who use any of the services regularly, and I haven't heard of anyone upset that they can't pay for them individually, instead of one of the competitors. So if it turns out the expense of providing all of these "value ad" features to Prime customers, without giving them a chance to opt out and only receive free two day shopping, is driving the membership increase-- then how does it feel?
At some point, Amazon customers won't want to subsidize Amazon's efforts to enter new markets-- at least not without choice.
Marco Arment has an excellent blog post "Worse" about how Amazon and its tech peers are increasingly making decisions based on monopolistic interests, instead of customer interests:
This isn’t just an Amazon problem. In the last few years, Google, Apple, Amazon, Facebook, and Twitter have all made huge attempts to move into major parts of each others’ businesses, usually at the detriment of their customers or users. (How sad is it that Microsoft isn’t even in this list? They invented this move.)These decisions are ones we all deal with as customers because we value the primary service enough, but we wish we didn't have to. And it forces us to always be on the lookout for alternatives-- new products, new companies, that don't force us to accept those terms. Think about the negative karma that companies have generated by forcing us to use Google+ instead of Google Reader, Apple Maps instead of Google Maps, Twitter photos instead of Instagram, etc.
I strongly believe sacrificing customer satisfaction to pursue monopolistic tendencies isn't a good long term strategy. Especially if the product companies provide us as a replacement for their competitors is inferior.
