Amazon Testing Monthly Prime Membership, Just in Time for the Holidays

Amazon (AMZN) quietly made a big change to its Prime service this week, allowing some customers to subscribe on a monthly basis rather than committing to a full year.

The service, which includes free two-day shipping and free streaming of movies and TV shows in Amazon's library, normally costs $79 for a year's commitment. The monthly option will cost $7.99, which comes to $96 annually.

But paying a premium of $1.50 a month is sure to appeal to customers who don't necessarily want to commit to a full year of the service. And the $7.99 pricing puts it on even footing with competing streaming services Netflix (NFLX) and Hulu Plus -- both of which have more robust streaming libraries than Amazon, but can't offer benefits like free Amazon shipping.

The move is being seen in many quarters as an attempt by Amazon to compete more directly in the streaming market. And one analyst suggested today that the change makes it less likely that Amazon will attempt to acquire Netflix, which looked like a possibility last week.

But from a consumer perspective, the biggest benefit to the monthly plan is that it allows customers to take advantage of Prime shipping during the holiday season.

Until Amazon sweetened the pot last year by introducing video streaming and the Kindle Owners' Lending Library, Prime mainly appealed to customers who made frequent purchases on Amazon; the average shopper, meanwhile, likely didn't save enough on shipping over the course of a year to justify the $79 price tag. But consumers are going to be making much more frequent purchases over the next couple of months, and if you plan to do a lot of your gift shopping on Amazon it might make sense to get Prime for a month or two. If you make three or four purchases in December and get free shipping through Prime on each one, then the $7.99 fee pays for itself. And keep in mind that Prime also offers one-day shipping for $3.99, which is good for those last-minute purchases.

For now the monthly option is in a testing phase; the offer only appeared on half the computers we checked, and Amazon wouldn't confirm the timing of a wider rollout. It's also unclear whether the monthly plan would replace or complement the annual option. But if you're one of the lucky ones who are able to get a crack at the monthly membership, you should consider getting it for the holidays.

Just don't forget to cancel your membership once the holidays are over -- unless, of course, you decide you want to keep it year-round.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.