Amazon increases fee for Prime to $99 a year

Amazon is betting that shoppers will pay $20 more for its popular Prime two-day free shipping and video-streaming service of movies and TV shows.

The online-retailing behemoth said Thursday that it is raising the price of Prime to $99 a year as it seeks to offset rising costs to ship products to customers - the first price increase since Amazon rolled out the service in 2005.

The move could please investors at a time when Amazon continues to face pressure to boost its bottom line after years of furious growth. As more Americans shop online, Amazon has spent heavily to expand its business into new areas - from e-readers to groceries - often at the expense of its profit.

Shares closed nearly flat Thursday at $371.51, up a scant 0.87, or 0.23 percent.

But with the price increase, Amazon risks antagonizing online shoppers, who tend to resist fee increases.

To ease the blow, the company - which in January warned it would probably raise the price of Prime anywhere from $20 to $40 - is bolstering the membership program by making millions more items available for two-day shipping and rolling out a greater selection of streaming TV shows and movies.

In 2011, when Netflix tried to raise its annual subscription fee, the online video-streaming service had to do an about-face amid widespread customer backlash and a jarring stock plunge of 80 percent from its highs.

On Thursday, social media were buzzing about the Amazon announcement. Prime users' comments fell equally on each side of the fence, between those who didn't mind the increase and those who planned to stop using the program.

Nick Begley of Salisbury Mills, N.Y., ordered from Amazon 53 times last year, everything from Curious George books for his toddler to a car-phone charger. Begley, 33, said he shopped at Amazon more since joining Prime in 2012 and is hooked on the convenience.

"It's my go-to retail site," he said. "Seventy-nine dollars was a great price, but $99 is not enough for me to give it up."

Rick Valente, 25, of Boston, felt the complete opposite way. After learning of the increase, he checked how much he actually uses Amazon.

"It was never worth it to begin with, and it definitely isn't worth it with the price increase," Valente said.

The company does not disclose how many Prime members it has, but it said in December that it has "tens of millions" of members worldwide.

Analysts said that if Prime users were turned off by the increase, it could have a significant impact on Amazon's business. Since it was introduced, Prime has increased customers' appetite for speedy and reliable service, said Jordy Leiser, CEO of StellaService, which tracks customer service.

Although Amazon does not release data, analysts said Prime members are more loyal and spend more money on the site than non-Prime subscribers.