A free version of the Amazon Prime Video service is in the works and is envisioned as utilizing an ad-based business model, AdAge reported on Monday, citing sources close to the Seattle, Washington-based company. The tech giant is presently said to be negotiating with numerous content creators whose programming could be part of the new service that doesn't have a firm availability window attached to it and it's currently unclear whether the free counterpart to Prime Video would have a somewhat comparable library of content in terms of sheer scope. Apart from traditional advertising that may also encompass product placement, Amazon may also seek to monetize the platform by sharing aggregated user information with its partners, sources suggested.
Content creators featured on the platform would likely be paid depending on the popularity of their shows and movies, i.e. the exact time people spend watching it, according to the same report. Such a compensation model would be largely similar to the one utilized by the Amazon Underground program which provided consumers with free access to premium Android apps until its discontinuation earlier this year. The actual payment amounts would reportedly be organized by popularity tiers, with Amazon supposedly considering providing content creators with their own channels. The planned volume of advertising on the platform remains unclear, much like the possibility that programming authors would have any input over how many ads are served to their viewers over a given period.
While Amazon Studios has been committing significant resources to content in recent times, the unit's main purpose remains generating Prime leads, with the e-commerce giant previously concluding that Prime subscribers spend more money on its platform and many of them signed up for the $99-per-year membership primarily due to Prime Video. Based on that data, Amazon's current strategy is to indirectly drive more online sales by delivering high-quality content that will prompt people to sign up for Prime Video and consequently experience other advantages of the service, ultimately convincing them to start buying more products from the firm. Given that state of affairs, it remains unclear how an ad-supported video platform would tie into the company's existing business model as it would presumably come with no other Prime-related benefits like free two-day shipping and access to Audible, whereas any profit generated by it would likely be insignificant for the largest online retailer on the planet.