Report: Amazon considering free streaming service

NEW YORK (CNNMoney)

Emphasis on the word "might."

The company is planning a free streaming service that could complement the $99-a-year Amazon Prime product that it already has, according to The Wall Street Journal.

A few hours after the report surfaced, though, Amazon seemed to dispute it, telling reporters that "we have no plans to offer a free streaming media service."

The back-and-forth stoked yet more curiosity about Amazon's multimedia plans.

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Currently Amazon Prime has three main features: free two-day shipping, a streaming selection of TV shows and movies, and an e-book lending library. There's no way to access Amazon (AMZN, Fortune 500)'s original TV shows, like "Alpha House" and "Betas," without a Prime subscription.

The free service Amazon is considering could change that. As described by The Journal, it would resemble Hulu, the online video site jointly owned by the parent companies of broadcasters ABC, NBC and Fox. Most visitors to Hulu only use its free, ad-supported version, but about five million subscribe to its paid version, called Hulu Plus.

Hulu Plus costs $8 a month, or $96 a year, roughly equivalent to Amazon Prime (but without the free shipping or other perks).

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The free version of Hulu features many TV shows, including some that are exclusive to the website. But because of the various limitations and delays imposed on the free version, some visitors are persuaded to pay for Hulu Plus.

Amazon might be eyeing a similar two-tiered business model, especially as it prepares to sell a streaming video device of its own.

On Thursday, hours before the Journal report, the company invited reporters to an April 2 event where the device is expected to be announced. The long-rumored device -- which has been likened to Apple (AAPL, Fortune 500) TV and Google (GOOG, Fortune 500) Chromecast in press reports -- will help users watch Internet content, including Amazon Prime TV shows, on big-screen TV sets.

Amazon may also want to delve deeper into the advertising sales business. Selling ads before and after TV episodes (and other forms of content, like music videos) would take another page from the broadcasters' long-established playbook.

On Thursday evening, an Amazon spokeswoman said, "We have a video advertising business that currently offers programs like First Episode Free and ads associated with movie and game trailers, and we're often experimenting with new things, but we have no plans to offer a free streaming media service."

First Published: March 27, 2014: 7:32 PM ET

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