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Amazon.com Inc. said it plans to start a new music streaming service that—like at least half a dozen competitors—offers on-demand, unlimited access to tens of millions of songs for a monthly fee.

Distinguishing Amazon Music Unlimited, which was to launch Wednesday: Customers using the retail giant's voice-activated Echo speakers will pay just $3.99 a month—less than half the $9.99 charged by most rivals—and will be able to stream music in a markedly different way.

Users can ask the Echo's robotic assistant Alexa to play a certain band's "new song" without knowing the title, a certain act's music from a particular decade or a song that features particular lyrics, even if they can't recall the song title or artist.

Amazon's vice president of music, Steve Boom, said he expected the new service to "really expand the streaming market" given its "disruptive price points" and its potential to turn music streaming into a communal experience centered in the living room, rather than on a smartphone.

"In the digital era, [group listening is] one of the things that's been lost," said Mr. Boom, adding that his team developed several features to try to evoke the old-time feeling of listening to vinyl records with friends and studying the liner notes. Users can ask Alexa to play a commentary by an artist introducing and commenting on a playlist of his or her songs. Lyrics, meanwhile, automatically scroll across the screen on other devices as each song plays. (The Echo, the original version of which costs $180, doesn't have a screen.)

The service is a welcome addition for the music industry, which is counting on paid streaming services for growth as sales of CDs and downloads continue to decline.

Spotify AB counts more than 40 million paying subscribers world-wide, and Apple Inc.'s Apple Music has at least 17 million, with 18 million total streaming subscribers in the U.S. contributing to an 8% revenue increase in the first six months of 2016 over the same period a year ago, according to the Recording Industry Association of America.

The record business has barely grown in recent years after seeing sales decline 60% from their peak in 2000. But such paid services are still tiny compared with older, free music services that pay rightsholders far less per user, such as internet radio's Pandora Media Inc., with nearly 80 million users, and Alphabet Inc.'s YouTube, with more than one billion users.

The new service could also help Amazon in its arms race with other tech giants including Alphabet Inc., Apple and Microsoft Corp. to develop artificial-intelligence assistants, which are expected to run everything from houses to automobiles in the near future. Amazon has increasingly focused resources on its own voice-controlled devices that use artificial intelligence to summon Uber rides, dim bedroom lights, play music and place online orders, and it has sold at least 5 million Echo devices to date, according to research firm Consumer Intelligence Research Partners. Amazon is now offering a $50 Echo Dot for pre-order; Alphabet last week made its debut its own competitor to the Echo, a wireless speaker called Home.

Amazon is selling Echo speakers and streaming subscriptions alike, primarily in hopes of keeping customers shopping and getting them to pay $99 a year to be Prime members; it sells many of its devices at close to cost. In addition to getting free shipping, Prime members can use Amazon Music Unlimited for $7.99 a month, though they already get access for no additional charge to the company's more limited Prime Music service, which launched two years ago and includes on-demand listening to two million tracks. Amazon Music Unlimited costs $9.99 a month for everyone else.

To address complaints that on-demand services are overly complicated and overwhelming for users faced with a choice of 40 million songs and thousands of playlists, Amazon's service will feature a single "song of the day," picked by an editorial team, plus personalized recommendations based on a user's listening habits and preferences. If the company observes correlations between customers' musical tastes and their shopping habits for other products, it could incorporate that data into its music suggestions as well, said Amazon's director of product management and engineering, Kintan Brahmbhatt.

While Amazon had been planning the new streaming service for more than a year, Mr. Boom said it was no small feat to teach Alexa what users might mean by "the new song" from a certain band, for example, given that most of the songs on an album technically have the same release date. Instead, the system is programmed to identify the latest song being promoted by the record label to radio. Amazon also tagged songs with emotions and activities, so that listeners can ask Alexa to play "happy" music of a certain genre, or tunes for workouts or dinner parties.

Write to Hannah Karp at hannah.karp@wsj.com and Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

October 12, 2016 09:35 ET (13:35 GMT)

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